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PVM Midday Report 24 February 2016

Published Wednesday, February 24th, 2016

Headlines

  1. Venezuela expects at least 10 oil-producing nations will take part in oil output freeze
  2. API reports hefty 7.1 million bbl build in US crude oil inventories; gasoline +600,000 bbls
  3. Iraq’s OPEC governor urges global oil producers to act quickly to eliminate oil imbalance
  4. Dubai crude oil differential to DME Oman futures for May set at -20cts/bbl

Oil                                                                                              

Fundamentals: Shortly after Saudi’s oil minister yesterday dismissed the prospect of a cut in oil production, his Venezuelan counterpart revealed that he currently expects more than 10 oil-producing nations from both OPEC and non-OPEC to join the recently agreed oil output freeze. This comes as Iraq’s OPEC governor urged OPEC and non-OPEC producers to act quickly to bring the oil supply imbalance under control. Elsewhere, the API has reported a far bigger-than-expected 7.1 million bbl build in US crude oil inventories with +300,000 bbls at Cushing. Gasoline stocks are said to have built by 600,000 bbls while distillates drew by 300,000 bbls.

Technicals: The contracts are looking vulnerable and look like heading lower towards recent lows. WTI is below all the s/t MAs, but holding just over the continuation 34 day at 30.66. It needs a move confirmed by a close (m/c) below 30.66 to green light the next leg lower to 28.74. Brent is also below all the s/t MAs and the 34 day at 32.54 but is being held up by the continuation 34 day at 32.14. It would need a m/c below 32.14 to green light a target lower to 29.92. Heat is below the key 34 day at 101.14. It needs a m/.c below here to activate a leg down to 98.50. RBOB looks like heading for 93.60 whilst below the 5 day around 97.17. Gasoil is struggling to hold the 34 day MA at 300.00 and a m/c below here would green light a leg lower to 293.25. The contracts are testing medium-term (34 day) MA assorted supports. These are “trapdoor” dips to the initial supports. More downside is needed before the down trend kicks in again.

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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.