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PVM Midday Report 08 June 2016

Published Wednesday, June 8th, 2016

Headlines

  1. Niger Delta Avengers reject government offer to begin talks
  2. Chinese crude oil imports surge almost 40% y/y in May to 7.59 mbpd
  3. China announces fourth increase in domestic retail fuel prices since January
  4. API reports bigger-than-expected 3.6 million bbl draw in US crude oil stockpiles
  5. Cameroon’s crude oil output rose by 19.4% y/y in January-April to 12.3 million bbls

Oil                                                                                              

Fundamentals: A day after both crude benchmarks registered their first simultaneous close above the $50/bbl level, Brent and WTI are making further headway after the Nigerian militant group responsible for a series of oil attacks snubbed the government’s offer to start talks. This comes as the group, which call themselves the Niger Delta Avengers, claimed responsibility for blowing up an oil well in the early hours of this morning. Elsewhere, Chinese crude oil imports rose nearly 40% y/y in May to 7.59 mbpd on strong appetite from teapots though this was down 300,000 bpd on the previous month. Staying with China, it announced that it will raise domestic retail fuel prices to reflect increasing crude prices and is the fourth such upward adjustment since January. Meanwhile, the API has reported a 3.6 million bbls fall in US crude inventories while stocks at Cushing are said to have dropped by 1.3 million bbls.

Technicals: The market is continuing higher, and the only contract still below the short term (s/t) MAs is RBOB. Meanwhile the rest are above, and have targets higher. These are on WTI to 50.92 (just hit) and with a move and close (m/c) over to 52.25. Brent needs to m/c over 51.65 to green light a move higher to 53.38. Heat needs to stay over 154.35 to activate a leg up to 157.96, and Gasoil over 465.00 for a target higher to 502.75. Watch the key levels. Upside is developing.

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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.