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PVM Midday Report 02 February 2016

Published Tuesday, February 2nd, 2016

Headlines

  1. Russian crude oil output edges up to fresh post-Soviet high of 10.88 mbpd in January
  2. Iran plans to increase oil exports to 2.3 mbpd in the coming fiscal year beginning March 31
  3. Citibank voices doubt over joint OPEC/non-OPEC oil cut; says oil prices have bottomed out
  4. Eurozone jobless rate dips to four-year low of 10.4%; producer prices fall 0.8% in Dec

Oil                                                                                              

Fundamentals: Russia has once again reiterated its willingness to discuss a joint oil cut with OPEC and other non-OPEC countries, this time by comments from the country’s Foreign Minister. This comes as Citibank became the latest institution to voice its doubts over a potential agreement and also claimed that oil prices have reached a bottom. Prospect of a production cut were dealt a blow after figures revealed that Russian crude oil out inched to a new post-Soviet record high of 10.88 mbpd in January in what was a 50,000 bpd increase on the previous month. Meanwhile, Iran remains committed to recapturing lost oil market share after an oil official claimed it was targeting crude oil exports of 2.3 mbpd for the new fiscal year beginning March 21.

Technicals: The contracts are in trouble and have entered support-testing mode. WTI has slipped below all of its daily M/As, having failed to hold its 13-day at 31.18 and a close below will mean the end of the recent uptrend. Brent, Heat and Gasoil are below the 5 and 8s but still holding the 13s at 31.96, 98.47 and 281.50 – a close below will have serious bearish consequences. RBOB has broken through several supports and it should only be a matter of time before it tests its downside target at 101.59. The downtrend is reasserting itself and as such it is advised to stick with it. Sell rallies back up to the highest of the s/t daily M/As. 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.