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PVM Midday Report 29 March 2016

Published Tuesday, March 29th, 2016

Headlines

  1. Kuwait’s acting oil minister reveals jointly run Khafji oilfield to resume production
  2. Chinese output of petroleum products rises by 8.5% y-o-y in Jan-Feb
  3. Saudi Arabia’s net foreign assets fall by 1.7% in February to lowest since May 2012
  4. Eurozone lending to businesses and households jumps 0.9% and 1.6% m/m in Feb

Oil                                                                                              

Fundamentals: Kuwait has announced that the 280,000 bpd Khafji oilfield that it jointly owns with Saudi Arabia will resume production after a 17-month hiatus though the restart will be “small and gradual”. Staying with OPEC, Saudi Arabia’s foreign holdings of assets has fallen by 1.7% in February from the previous month to an almost four-year low of $584 billion as it continues to grapple with a swelling budget deficit caused by the slump in oil prices. Meanwhile, China’s output of oil products has leapt by 8.5% y-o-y in the first two months of this year as independent refineries led a broad-based increase in crude runs.

Technicals: The contracts are in trouble. All are below the short term MAs and have negative stochastics with bearish divergence. The “bearish divergence” – making itself known three or four days ago – is making lower numbers likely and rallies difficult to maintain. We are currently witnessing its negative impact. WTI needs a m/c below the 100 day at 39.18 to green light a target to 36.91, the 34 day. Brent needs a m/c below the 100 day at 39.25 to activate a leg down to 37.52, 34 day. Heat must hold the 100 day at 116.72 or it heads south to 113.71. A m/c below 144.51 on RBOB would activate a leg south to 142.21, the 200 day. Gasoil needs a m/c below 347.75 to green light a move lower to 344.25. Watch RBOB carefully.

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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.