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PVM Midday Report 26 February 2016

Published Friday, February 26th, 2016

Headlines

  1. Kurdish crude export pipeline via Turkey to remain offline for at least another two weeks
  2. Suspended flows of Nigeria’s Forcados crude could last until April
  3. Preliminary state-inflation data points to German deflation in February
  4. European Commission survey of economic sentiment falls to eight-month low

Oil                                                                                              

Fundamentals: Flat price continues to receive support from the recently announced meeting planned for the middle of next month where an oil output freeze between OPEC and non-OPEC producers is expected to be formalised. Additional upside momentum is coming from the ongoing woes of Nigeria’s Forcados crude stream where a recent pipeline leak could now see the halt in flows to the export terminal last until April with production also likely to fall in the interim period. Similar pipeline issues are being tracked in the semi-autonomous Kurdistan region in northern Iraq where flows along the major crude export pipeline to Turkey are not expected to resume for at least another two weeks. This is in spite of an earlier prediction that it would come back online by the end of this month.

Technicals: The market is correcting higher and putting some serious resistance levels under pressure. WTI has strong range resistance at 34.21 and a move confirmed by a close (m/c) over makes a move higher to 34.89 (55 day MA) very likely. Brent is below the Dec 2008 low at 36.20 and needs to move above it for a leg higher to 37.55. Apr’ Heat needs a move above the 55 day MA at 109.74 to give it a good chance of heading for the 112.04/52 level. Apr’ RBOB is needs to climb above 132.45 for a leg up to 134.85 (55 day). Gasoil has strong resistance at 329.50. The action is above the s/t MAs and the stochastics are positive. It is doubtful whether the contracts will maintain this strength. The contracts are in a dangerous condition – tread with caution.

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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.