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PVM Midday Report 07 July 2016

Published Thursday, July 7th, 2016

Headlines

  1. Force majeure on Nigerian exports of Bonny Light crude lifted after two-month hiatus
  2. API reports bigger-than-expected 6.7 million bbl draw in US crude oil stockpiles
  3. Libyan oil port guards in talks with state-oil company to reopen oilfields
  4. UBS raises its 2016 Brent and WTI price forecasts by around $4 to $46.32/bbl and $43.81/bbl
  5. German industrial output suffers unexpected 1.9% m/m dip in May

Oil                                                                                              

Fundamentals: Oil prices are on the front foot as attention turns to today’s weekly update on US oil inventories. Last night’s API report has set a bullish tone after revealing that US crude oil stockpiles fell by a bigger-than-expected 6.7 million bbls with Cushing stocks showing a marginal build of 80,000 bpd. Gasoline and distillate inventories were also reported to have drawn by 3.6 million and 2.3 million bbls respectively. Elsewhere, the two-month old force majeure on exports of Nigeria’s Bonny Light crude has been lifted following the completion of pipeline repairs. Libya’s oil prospects were also dealt a helping hand by reports that guards in charge of its Ras Lanuf and Es Sdier oil export ports are in talks with the state-oil company to restart production at nearby oilfields. Meanwhile, UBS has upped its 2016 Brent and WTI price forecasts to $46.32 and $43.81 which is an increase of around $4/bbl on their previous estimates.

Technicals: The contracts have followed through a bit higher this morning. They are now testing the dangerous short term MAs. These are on WTI around 47.86/92 (5 and 8) with the 13 higher around 48.46; Brent 49.30/60 (5 and 8) withe 13 around 49.77; Heat 149.68 (13); RBOB 146.60 (5) then 148.56 (8); and Gasoil 435.25 (13). These need to be moved and closed over for any further upside. They are dangerous levels and it’s advised to be careful around these s/t MAs. They will determine the next leg.

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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.