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PVM Midday Report 09 February 2016

Published Tuesday, February 9th, 2016

Headlines

  1. IEA claims OPEC/non-OPEC output cut is unlikely; sees 2016 oil stock build of 1 mbpd
  2. Iran’s oil minister reveals that its domestic oil industry needs $200 billion of investment
  3. Iraq raises the March OSP of its Basra Light to Asian buyers by 20cts/bbl from February
  4. Gauge of small US business confidence slips to two-year low in January
  5. German industrial output in surprise m-o-m fall of 1.2% in December

Oil                                                                                              

Fundamentals: In its latest monthly report, the IEA has slightly pared back its 2016 global oil demand growth estimate by 50,000 bpd to 1.15 mbpd and placed the likelihood of a joint OPEC/non-OPEC production cut as “very low”. It claims that OPEC’s crude oil output rose by 280,000 bpd in January to 32.63 mbpd and projects crude oil stock builds for this year to average just over 1 mbpd. Elsewhere, Iraq has failed to follow Saudi’s lead in cutting its Light crude March OSP to Asian buyers after raising it by 20cts/bbl compared with February’s price. Meanwhile, Iran’s oil minister has revealed that its oil industry will need $200 billion in what it hopes will be mostly foreign investment in order for it to achieve its development goals.

Technicals: The contracts remain under pressure and apart from the odd rally look set to erode lower. This view is held whilst there are no bullish Russia/OPEC/Saudi headlines. If March RBOB stays below 96.70 and April below 119.76 the odds are that all contracts will head south. Only Heat and Gasoil are holding over the 13 day MAs around 103.54 and 297.00. The rest are below all the s/t MAs and with negative stochastics. The market is fragile and vulnerable.

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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.