PVM Midday Report 01 July 2016

Headlines

1. Iraqi crude oil exports ease to 3.175 mbpd in June on rising domestic use
2. Barclays trims 2016 Brent and WTI price estimates by $3 to $44/bbl & $43/bbl respectively
3. North Sea Brent loadings set to rise in August to 116,000 bpd from 97,000 bpd in July
4. Caixin/Markit Chinese factory PMI slips in June to 48.6 from May’s 49.2
5. Eurozone manufacturing PMI climbs to six-month high of 52.8, jobless rate dips to 10.1%

Oil                                                                                              

Fundamentals: Iraq crude oil exports from its southern ports registered a modest fall to 3.175 mbpd last month from the 3.2 mbpd observed in May as the onset of summer triggered an increase in domestic consumption for cooling. Staying in the region, Saudi Arabia has aggressively cut the August selling price of its Light and Extra Light crude loadings destined for Asian buyers in the latest sign that the battle for market share is intensifying. Elsewhere, North Sea Brent crude loadings are expect to rise in August to around 116,000 bpd from 97,000 bpd in July though the Ekofisk stream is set to load around 213,000 bpd which is down from 271,000 bpd in July. Meanwhile, Barclays has trimmed its 2016 Brent and WTI price forecasts by $3 to $44/bbl and $43/bbl respectively but predicts oil prices will rebound strongly in the first half of next year to $60-65/bbl.

Technicals: The contracts are in trouble and are with the exception of RBOB below all of the s/t daily MAs. Closes below the 5-day MAs (48.09 WTI; 49.50 Brent; 148.78 Heat and 435.75 Gasoil) would activate a leg lower to the 55-day MAs. They are 47.81 WTI, 48.88 Brent, 144.92 Heat and 428.75 Gasoil. RBOB is below the key 100 and 200 MA supports at 148.37/42 – a close below will take the rest of the complex down with it. Odds are on further weakness next week but until the next leg is clear it is advised to keep exposure limited.

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