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PVM Midday Report 10 February 2016

Published Wednesday, February 10th, 2016

Headlines

  1. Rosneft chief blames supply imbalance on OPEC; doubts global producers will agree on a cut
  2. Iranian oil official claims that it cannot cut output as it needs to reclaim lost market share
  3. OPEC crude oil output climbs 130,000 bpd in January from December to 32.33 mbpd
  4. OPEC trims projected 2016 call on its crude; forecasts oil stocks will build by 720,000 bpd
  5. Iran’s oil minister reveals debts owed to it by foreign oil majors likely to be settled in euros

Oil                                                                                              

Fundamentals: OPEC have followed in the footsteps of the IEA and EIA in trimming the projected call on its crude for this year, reducing its estimate by 40,000 bpd to 31.61 mbpd, and has predicted stock builds will average 720,000 bpd. The cartel’s output was seen rising by 130,000 bpd to 32.33 mbpd in January according to secondary sources with Iraq and Nigeria largely responsible for the increase. Elsewhere, a senior Iranian oil official has claimed that it cannot cut its crude oil production as it needs to increase its market share to pre-sanctions levels. This comes as the Iranian oil minister was quoted as saying that he supports dialogue and cooperation with all OPEC members including Saudi Arabia.

Technicals: The market is recovering a bit this morning, but this is not expected to last. The key technical indicators are negative and support the bearish view. There are targets lower on WTI to 27.56 and Brent to 30.12. Heat would acquire a target lower to 86.05 on a move confirmed by a close below 98.59. RBOB needs a m/c below 89.70 to green light an objective to 78.50; and Gasoil below 281.50 to have an objective to 262.50. The trend is down – stick with it.

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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.