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PVM Midday Report 05 February 2016

Published Friday, February 5th, 2016

Headlines

  1. Asian gasoline margins tumble by more than 35% this week on ample stockpiles
  2. Chinese February crude oil imports forecast to reach 7.68 mbpd
  3. Russian offline refining capacity seen rising this month to 2.1 million tonnes
  4. German industrial orders suffer bigger-than-expected 0.7% fall in December

Oil                                                                                              

Fundamentals: Russia’s offline primary refining capacity for this month is seen at 2.1 million tonnes, above expectations of 1.3 million tonnes but below the 2.8 million tonnes of offline refining capacity planned for March. Meanwhile, Asian refiners will be fretting after gasoline margins across the region fell by more than 35% this week – the biggest drop in over two years – as storage tanks inched closer to their tops. The outlook however remains positive with Asian gasoline demand set to rise by 4-5% this year compared with 2015 and the looming refinery maintenance season set to weigh on supply.

Technicals: The market continues to be erratic and subject to the latest headline. The recovery is still anticipating bullish Russian/OPEC/Saudi news and if something concrete (bullish) does not come out soon the contracts will be exposed and vulnerable. Gravity normally comes into play in such conditions. At the moment most contracts are being held back by strong and pivotal resistances – at 32.40 WTI; 35.94 and 36.20 Brent; 112.52 Heat; 101.59 (support) RBOB; and 313.25 Gasoil. There is no upside potential until these levels are moved and closed below. The market is desperate for bullish news to justify the last 10 days or so price action. If this does not materialise things could get nasty very quickly.

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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.