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PVM Midday Report 25 January 2016

Published Monday, January 25th, 2016

Headlines

  1. Iraqi implied crude oil output hits record average of 4.73 mbpd in Dec
  2. OPEC Sec-Gen calls on OPEC and non-OPEC producers to tackle oil glut together
  3. Iran expands size and scope of existing oil export agreement with Japan
  4. Chinese crude oil inventories slip 0.7% at the end of December from the previous month
  5. German economic morale dips by more-than-expected in January – IFO

Oil                                                                                              

Fundamentals: Iraqi implied crude oil output averaged a historic high in December of 4.73 mbpd and may increase further according to a senior oil official from the OPEC member country. Iran has stepped up its efforts to bolster crude oil sales after reportedly extending the range and scope of an oil export agreement with Japan. OPEC’s Secretary-General has hinted that OPEC and non-OPEC producers must work alongside each other to tackle the growing oil glut and allow prices to stabilise. Meanwhile, Beijing has issued four independent domestic refineries – so called teapot refiners – oil import quotas while figures released have shown that Chinese crude oil stocks fell 0.7% in December from the previous month.

Technicals: The downtrend is reasserting itself and the contracts are retreating. Action around the 13-day M/As will determine the next leg. They are at 30.88 WTI; 30.62 Brent; 97.99 Heat; 107.70 RBOB and 281.50 Gasoil. These aforementioned levels have been tested this morning but only a conclusive move and close below will have the complex lose further value. Watch the 13s – they are the key. Until then stick with the trend. 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.