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PVM Midday Report 27 January 2016

Published Wednesday, January 27th, 2016

Headlines

  1. Iraq signals willingness to attend emergency OPEC meeting sought by Venezuela
  2. API reports biggest weekly build in US crude oil inventories since 1996
  3. Iraq finance minister casts doubt over OPEC/non-OPEC oil production cut
  4. Profits earned at Chinese industrial companies dip by 4.7% in Dec after 1.4% decline in Nov

Oil                                                                                              

Fundamentals: Flat price is coming under downward pressure after the API reported a staggering 11.4 million bbl build in US crude stockpiles and, if mirrored by the EIA, represents the biggest weekly increase since May 1996. The prospect of OPEC and non-OPEC cooperation was dealt a blow after Iraq’s finance minister expressed doubts over an oil output agreement between both parties. He added that it would be willing to attend the emergency meeting sought by Venezuela and expressed hope that prices may rebound as early as Spring on falling US shale output.

Technicals: The contracts are losing value but all bar RBOB remain above the s/t daily MAs. However, the violent swings of the last three sessions mean that these technical indicators are fading in importance. It is best to look at the recent lows, a close below which would give the downtrend fresh impetus. They are 29.25 WTI; 29.29 Brent; 90.26 Heat; 100.05 RBOB and 262.50 Gasoil. Bears will regain control should these aforementioned levels be above tonight’s close. Until then it is advised to sit on one’s hands until the next leg is clear.

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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.