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PVM Midday Report 03 February 2016

Published Wednesday, February 3rd, 2016

Headlines

  1. Russian Foreign Minister reiterates readiness to meet with OPEC members
  2. Iran calls for closer ties on energy issues with Russia, Iraq and Venezuela
  3. API reports 3.8 million bbl build in US crude oil stocks to just below 500 million bbls
  4. Private survey of China’s services sector rises to 6-month high of 52.4 in January

Oil                                                                                              

Fundamentals: Flat price is receiving support from fresh comments made by the Russian Foreign Minister signalling the country’s readiness to meet with OPEC and was coupled with remarks from Iran in which it called for closer ties on energy issues with Russia. Meanwhile, the API has reported the fourth sizeable weekly increase in US crude oil stocks, this time of 3.8 million bbls, which would see them rise to a new record high and just shy of the 500 million bbl mark. Gasoline and distillate builds were also reported at +6.6 million bbls and 400,000 bbls respectively.

Technicals: The contracts are attempting to move higher though ongoing weakness in RBOB means this strength will likely be short-lived. The expected test of the 13-day MA supports on Brent, Heat and Gasoil as not taken place and instead they have rallied towards the highest of the s/t MAs which stand at 34.22, 104.08 and 299.75. Only conclusive closes above them will have these contracts looking healthy again. The outlook for WTI remains downbeat unless it can muster a close over its 13 at 30.94 while RBOB looking increasingly awful with little currently preventing it from falling below its Jan 09 low of 96.69 which in turn would greenlight its Dec 08 low of 78.50.

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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.