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PVM Midday Report 18 February 2016

Published Thursday, February 18th, 2016

Headlines

  1. Iran sees plan to freeze oil output as inadequate for correcting the current market imbalance
  2. JODI figures reveal Saudi crude oil exports slipped to 7.486 mbpd in December
  3. Russia warns that its oil output may fall 14% by 2020-2025 if low oil prices persist
  4. OECD trims 2016 and 2017 global growth estimates to 3% and 3.3%
  5. Chinese annual inflation rate quickens in January to +1.8%

Oil                                                                                              

Fundamentals: Iraq’s oil minister has announced that talks between OPEC and non-OPEC countries aimed at finding a way of shoring up oil prices have continued today. Though Iran has in principle given its backing to a production freeze, an official from Tehran has today claimed that such an outcome would not be enough to balance the oil markets. Russia’s energy ministry has revealed that a cutback in oil investments could see its output drop by 14% by 2020-2025 before recovering slightly in the subsequent years. Meanwhile, figures released by the JODI have revealed that Saudi crude oil exports dipped in December to 7.486 mbpd from 7.719 mbpd in the previous month.

Technicals: The market is in the midst of a springboard move higher from the s/t MAs (yesterday’s dip) to the potent resistances above. This is no more than a correction higher. The down trend has by no means left the stage. The resistance levels are very strong and are on WTI at 31.82 (34 day MA) then 32.40 (Dec 2008 low); Brent 35.94 (long term c/p) then 36.20 (Dec 2008 low); Heat 111.81 (55 day and range) followed by 112.52 (Dec 2008 low); and Gasoil 329.50 (range). These levels are dangerous, but m/cs over signal higher numbers and the down trend on hold. The resistance has a very good chance of holding.

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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.