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PVM Midday Report 21 January 2016

Published Thursday, January 21st, 2016

Headlines

  1. Iraqi Oil Minister confirms plans to increase oil output to more than 4 mbpd this year
  2. Kuwait reveals exports from jointly owned oilfields with Saudi Arabia will resume soon
  3. Libyan oil output steady at 362,000 bpd; IS militants launch attack near Ras Lanuf oil port
  4. BP CEO expects further downward pressure on oil prices for next six months
  5. Chinese diesel exports surge 264% in December from a year ago to 980,000 tonnes

Oil                                                                                              

Fundamentals: The emir of Kuwait has announced that operations and exports at the oilfields jointly run with Saudi Arabia will resume soon in a move that will add around 500,000 bpd to the existing global oil glut. This comes as the Iraqi Oil Minister downplayed the return of Iran to the oil export markets and said that it remained on course to increase crude oil output this year to a new record high of more than 4 mbpd. China’s desire to boost its oil-related product exports were highlighted by a 264% y-o-y surge in December of diesel sales to foreign buyers. As expected, Nigeria has raised the OSP for February loadings of its Bonny Light and Qua Iboe crude grades. Meanwhile, IS fighters have attacked oil storage tanks close to Libya’s Ras Lanuf oil port and comes as the head of its NOC reveals that the OPEC-member’s output remains steady at 362,000 bpd.

Technicals: The downtrend is entrenching itself and the contracts remain in trouble. They have objectives lower to 26.65 WTI; 25.05 Brent; 81.50 Heat; 96.69 RBOB and 245.50 Gasoil. These aforementioned targets are valid whilst the price action is below the 8-day MAs. Don’t be surprised by a short-lived upside correction but the key technical indicators are negative and as such lower numbers are on the cards. 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.