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PVM Midday Report 19 February 2016

Published Friday, February 19th, 2016

Headlines

  1. Russian oil official predicts oil output freeze deal will halve the current oil market surplus
  2. Norway’s preliminary crude oil production slips marginally in January to 1.627 mbpd
  3. Russia plans to increase crude oil output by 1.5% y/y in 2016 – Deputy Energy Minister
  4. German producer prices suffer 30th consecutive monthly decline in January

Oil                                                                                              

Fundamentals: A Russian oil official has claimed that the recently agreed oil output freeze is “useful and necessary” as it would halve the current oil market surplus which he put at 1.8 mbpd. He also added that monitoring participation would be easy and revealed that Russia plans to increase its 2016 crude oil production by 1.5% from last year. Staying with Russia, its deputy finance minister has hinted that its budget deficit could surpass 4% this year if oil prices remain at current levels. Meanwhile, preliminary figures have shown that Norway’s oil output fell marginally in January to 1.627 mbpd from 1.643 mbpd in December.

Technicals: The contracts are in short-term MA support testing mode. This could become severe if RBOB remains below 96.70. It is the only contract currently below all the short term MAs. The rest are just holding. April WTI is right on its 5 day around 32.21, with the 13 around 31.73 and 8 around 31.16. Brent is similar with the 5 around 33.59, and the 13 around 33.00 and the 8 around 32.78. Heat is on its 5 day around 106.51, with the 13 around 104.08 and 8 around 103.18. Gasoil has slid below the 5 around 315.00 and has the 13 around 308.50 and 8 around 307.00. RBOB is in trouble whilst below 96.70 and this could easily cause the rest to soften. Watch the 5-day MAs – they hold the key to the next leg.

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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.