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PVM Midday Report 15 January 2016

Published Friday, January 15th, 2016

Headlines

  1. Iranian crude oil exports set to hit 9-month high of 1.10 mbpd in January
  2. Russian Energy Minister reveals domestic oil companies’ cost of production is $5-15/bbl
  3. BNP Paribas trims 2016 Brent and WTI price forecasts to $37 and $36 bbl respectively
  4. Goldman Sachs maintains view that WTI will average $40/bbl in the first half of 2016
  5. Chinese bank lending falls by 15% in December compared with November

Oil                                                                                              

Fundamentals: As markets await the final IAEA report on Tehran’s nuclear programme and with sanction relief likely to be only days away, concerns of further Iranian barrels adding to the existing oil glut have been fuelled by figures showing that its exports are set to rise by 21% m-o-m in January to 1.10 mbpd. Russia’s Energy Minister has attempted to strike an upbeat tone by claiming that oil prices are unlikely to fall to $10/bbl and revealed that the production cost of domestic oil companies stands at $5-$15/bbl. Meanwhile, BNP Paribas had joined others in slashing its 2016 oil price forecasts. It now expects Brent and WTI to average $37/bbl and $36/bbl, down $17 and $14 from its previous estimates.

Technicals: The contracts continue to plough a southerly furrow and all have targets south. These are to 26.65 WTI; 25.05 Brent; 81.85 Heat; 102.31 RBOB; and 245.50 Gasoil. These are valid whilst the contracts remain below the 8 day MAs, which are a sell. There are now longer term targets much further below the market to 10.35 WTI and 9.55 Brent. The trend is down. It is not advised to be long.

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Posted by Stephen Brennock

Stephen Brennock joined PVM in 2013 after having worked as a project manager for a business development firm. He graduated with a degree in Business Management in 2007.