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PVM Midday Report 13 June 2016

Published Monday, June 13th, 2016

Headlines

  1. OPEC hints at tighter oil balance in 2H 2016; output down 100,000 bpd in May
  2. Chinese implied oil demand falls by 380,000 bpd in May y/y to 10.24 mbpd
  3. Iran’s biggest oil production company reaches pre-sanction output level of 2.9 mbpd
  4. Speculators increase bullish bets on ICE Brent crude by 1.39% in week to June 7
  5. Growth in Chinese fixed-asset investment and retail sales eases in May

Oil                                                                                              

Fundamentals: In its latest monthly oil report, OPEC has left its estimates for 2016 oil demand and non-OPEC supply growth at +1.2 mbpd and -740,000 bpd respectively. It predicts that the rebalancing process will begin in the next quarter with the call on OPEC averaging 32.52 mbpd in the second half of the year which is 2 mbpd more than that seen in the first half of 2016. Meanwhile, secondary sources revealed that short-term disruptions caused the group’s output to fall by 100,000 bpd in May from April. Elsewhere, Reuters have reported that Chinese implied oil demand slipped 380,000 bpd in May from a year ago to 10.24 mbpd. Meanwhile, money managers have increased their bets on rising ICE Brent crude prices by 5,326 lots in the week to June 7.

Technicals: The contracts are in trouble. The price action is below all the s/t daily MAs and the stochastics are negative. RBOB is around the key 50% c/p at 154.16 and a move and close below it will have the others fall to their current downside objectives. They are 47.75 WTI; 48.77 Brent; 149.90 Heat and 432.00 Gasoil. Keep an eye on RBOB at 154.16 – lower numbers are on the cards and it is not advised to be long.

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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.