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PVM Midday Report 26 January 2016

Published Tuesday, January 26th, 2016

Headlines

  1. Russia reclaims position as top crude oil supplier to China in December
  2. Credit Suisse slashes its 2016 Brent and WTI price forecasts by 44% and 33% respectively
  3. Kuwait’s OPEC governor expects oil prices at $40-$60/bbl from next year until 2020
  4. Goldman Sachs trims its 2016 Brent estimate by $5/bbl to $45/bbl

Oil                                                                                              

Fundamentals: Kuwait’s OPEC governor has added to recent calls for cooperation between OPEC members non-OPEC producers to help oil prices stabilise. He added that “things will be tough” in 2016 and predicts that oil prices will average $40-$60/bbl from next year until 2020. Credit Suisse has joined other financial institutions in slashing its 2016 oil price forecasts and now expects Brent and WTI to average $36.25/bbl and $37.75/bbl respectively. Goldman Sachs joined in with its own downward revision of its 2016 Brent forecast to $45/bbl, which was down $5/bbl from its previous estimate, whilst its equivalent projection for WTI was left unchanged at $45/bbl. Meanwhile, Russia overtook Saudi Arabia as the top crude oil supplier to China in December – the fourth such instance in 2015 – with crude exports of 1.13 mbpd versus 1.05 mbpd for the de-facto OPEC leader.

Technicals: The contracts are trading off the session lows and are making a decent attempt at testing the s/t daily MAs. However, bulls will only gain in confidence on a conclusive move and close above the 13-day MAs resistances. They are at 30.54 WTI; 30.31 Brent; 96.57 Heat; 106.56 RBOB and 277.75 Gasoil. This bout of strength looks unconvincing and is not expected to last. Rallies to the 13-day MA on the products and 31.24 & 30.27 on WTI & Brent therefore continue to provide good selling opportunities.

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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.