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PVM Midday Report 03 June 2016

Published Friday, June 3rd, 2016

Headlines

  1. Nigerian militants in three separate pipeline attacks on Brass River crude stream
  2. Russian Energy Minister maintains 2016 oil price forecast at $40-50/bbl
  3. Russia to hold meeting with OPEC later this year
  4. Eurozone services PMI inches higher to 53.3 in May; retail sales flat in April
  5. Caixin/Markit Chinese services PMI slips to three-month low of 51.2 in May

 Oil                                                                                               

Fundamentals: The Niger Delta Avengers have claimed responsibility for three separate pipeline attacks affecting the Brass River crude stream though the impact has been limited given that this grade is already under force majeure. The militant group warned of further attacks and that it would ultimately bring Nigeria’s oil production down to “zero”. Meanwhile, Russia has hinted that OPEC’s failure to agree on a production ceiling will not have an impact on oil prices and kept its 2016 oil price forecast unchanged at $40-50/bbl.

Technicals: The market is becoming more range bound where attempts to break higher or lower are being thwarted by solid support and resistance. In these conditions the short term (s/t) MAs act as either trapdoors to range support or springboards to range resistance. The negative stochastics strongly suggest that rallies to resistance will fail. WTI is below the 5 and 8 around 49.18/16 but above the 13 around 48.95. Brent is also below its 5 and 8 around 50.02/05 and holding the 13 around 49.73. Heat is the same with the highest around 150.36 (5 and 8) and the lowest around 149.64 (13). RBOB is being held back by the 8 and 13 around 163.27 and 163.73, and holding over the 5 day around 162.58 and range support around 162.15. Gasoil is below the 5 and 8 around 449.00/449.75 and being propped up by the 13 day around 445.50. The stochastics are negative. Keep an eye on the s/t MAs and RBOB – the latter will give early clues.

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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.