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PVM Midday Report 31 May 2016

Published Tuesday, May 31st, 2016

Headlines

  1. Loadings of North Sea Oseberg crude set to slip to 116,000 bpd in July
  2. Saudi Aramco plans to expand capacity of its east-west pipeline to 7 mbpd by 2018
  3. Asian imports of Iranian crude oil jump 13% y/y in April to 1.32 mbpd
  4. China issues draft rules for strategic oil reserves, invites private investments
  5. Reuters oil price poll sees Brent and WTI averaging $43.60 & $42 bbl this year

Oil                                                                                              

Fundamentals: Iran has made further inroads in reclaiming lost market share as figures revealed that its crude oil exports to Asia jumped by 13% y/y in April to 1.32 mbpd even though loadings to China and Japan fell slightly. Loadings of the North Sea Oseberg crude stream have been set at 116,000 bpd in July which is down from 140,000 bpd planned in June. Elsewhere, China has issued draft rules for its strategic oil reserves which include a provision for private investments in construction and operation of its strategic oil facilities. Meanwhile, the latest Reuters oil price poll has forecast that Brent and WTI will average $43.60 and $42 bbl this year which is up $1.30 and $1.50 bbl respectively on last month’s survey.

Technicals: The contracts are beginning to look tired and there is danger that RBOB is giving an early warning signal by already being the only contract below the short term (s/t) MAs. In the meantime, the stochastics are negative on the contracts with bearish divergence on WTI and Brent. These are worrying ingredients. WTI is just below the 5 around 49.48 and holding the 8 around 49.07. The 13 is around 48.79. The 8 and 13 need to hold. Brent is similar. It is below the 5 around 50.15 but above the 8 around 47.76 and the 13 is around 49.55. Heat is below the 5 around 151.03, but holding above the 8 around 150.24 and the 13 around 148.64. RBOB is below them all and also just below key support at 162.15. If below here for any serious period of time – over 2 hours – then the whole complex will look vulnerable. Gasoil is at the 5 day around 499.00, but above the 8 around 446.25. Watch the s/t MAs and RBOB.

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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.