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PVM Midday Report 20 January 2016

Published Wednesday, January 20th, 2016

Headlines

  1. Algeria’s energy minister stresses need for joint OPEC & non-OPEC oil output cut
  2. Russian oil major chief claims domestic oil output will fall 2-3% this year
  3. Citigroup trims its 2016 Brent price forecast to $40/bbl from previous estimate of $51/bbl
  4. UK jobless rate falls to 10-year low of 5.1%; wage growth figures weakest since Feb ‘15
  5. Emerging-market outflows seen at  $735 billion in 2015, up 18% on 2014

Oil                                                                                              

Fundamentals: The head of a Russian oil major has predicted that a cutback in domestic drilling will result in a 2-3% drop in crude output and estimates that a gradual recovery in oil prices will see Brent average $50 bbl this year. American banking giant Citigroup does not share his optimism after it slashed its own 2016 Brent forecast to $40 bbl from a previous projection of $51 bbl. Meanwhile, Algeria’s energy minister has again made the case for OPEC and non-OPEC producers to discuss the possibility of a joint cut in crude oil output.

Technicals: The contracts are resuming their nosedive and are rapidly approaching targets lower to 26.65 Mar’ WTI; 25.05 Brent; 81.50 Heat; 96.69 RBOB and 245.50 Gasoil. Shorts should be run to these levels and sold on conclusive move and closes below them. Rallies to the 5-day MAs remain sales on Mar’ WTI, Heat and Gasoil, and the 8s on Brent and RBOB. Nevertheless, the more likely scenario is on further price weakness and as such it is advised to stick with trend and do not 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.