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PVM Midday Report 29 February 2016

Published Monday, February 29th, 2016

Headlines

  1. Iranian crude oil exports hit 1.75 mbpd in the month to Feb 19; up 400,000 bpd y-o-y
  2. Reuters poll trims 2016 Brent and WTI price forecasts to $40.10/bbl and $38.90/bbl
  3. Speculators increase bets on rising ICE Brent prices to the highest since at least 2011
  4. Eurozone slips into deflation for the first time in five months
  5. Chinese central bank cuts banks’ reserve requirement ratio in latest effort to spur growth

Oil                                                                                              

Fundamentals: Iran’s oil minister has claimed that its crude oil exports topped 1.75 mbpd in the month to February 19 in what was a 400,000 bpd rise over the same period a year ago and added that it hopes to double oil exports to South Korea to 200,000 bpd by the end of 2016. Elsewhere, a number of US shale oil executives have hinted that a recovery of oil prices to the mid-40s will allow some operators to expand output. This comes as a Reuters poll of oil price forecasts predicts Brent and WTI will average $40.10/bbl and $38.90/bbl in 2016, down $2.40/bbl and $2.10/bbl respectively from the previous estimate. Meanwhile, net speculative length in ICE Brent crude has reached its highest level since at least 2011 after speculators increased bets on rising prices by 35,416 lots in the week to February 23.

Technicals: The market is shaking out from Friday’s rally then failure. It is stuck in a range where the s/t MAs are holding around the mid-point and acting as either trapdoors to support or springboards to resistance. It is not advised to expect the extremities to cave in and great care is advised. The range looks solid at the moment, and trading strategies should reflect this.

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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.