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PVM Midday Report 14 June 2016

Published Tuesday, June 14th, 2016

Headlines

  1. Iranian crude oil output reaches 3.8 mbpd, June exports expected to hit 2.31 mbpd
  2. IEA raises 2016 oil demand growth to 1.3 mbpd, signals rebalancing in 2H 2016
  3. Eurozone industrial output climbs 1.1% y/y in April, reverses 0.7% contraction in March
  4. Benchmark 10-year German Bund yields fall into negative territory on Brexit anxieties
  5. UK annual inflation rate holds steady in May at 0.3%, misses forecasts of +0.4%

Oil                                                                                              

Fundamentals: Iran’s oil minister has revealed that the country’s crude oil production has reached 3.8 mbpd and follows on from reports that its crude oil exports will rise this month to a four-and-a-half-year high of 2.31 mbpd on strong demand from European buyers. Elsewhere, the IEA has increased its oil demand growth projection for this year by 100,000 bpd to 1.3 mbpd following stronger-than-expected demand in the first half of this year. It also hinted that the oil imbalance will ease in the second half of this year when the call on OPEC crude is forecast to average 33.10 mbpd and compares to its May estimate of the cartel’s production of 32.61 mbpd. It also gave its first insights into the oil outlook for 2017 where it kept its estimate for global oil demand growth unchanged from this year at 1.3 mbpd and predicted that non-OPEC supply will expand by 200,000 bpd.

Technicals: It’s time to be very careful. There are valid targets lower – on WTI to 47.87; Brent to 48.85; RBOB to 150.28; and Gasoil to 437.00. Heat needs a move confirmed by a close (m/c) below 150.,25 to activate a target lower to 145.24. The daily stochastics are negative with bearish divergence on some contracts. The weekly stochastics have flipped negative and this may well be flagging a more substantial move south. Rallies to the short-term MAs are selling opportunities. 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.