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PVM Midday Report 11 July 2016

Published Monday, July 11th, 2016

  1. Iraq resumes crude loadings at its Basra terminal after repairing small pipeline leak
  2. Speculators trim bets on rising ICE Brent prices for fourth straight week
  3. Iran mirrors Saudi in cutting its August Light crude OSP for Asian buyers by 40cts/bbl
  4. Japan’s PM announces additional fiscal stimulus after triumphing at weekend elections
  5. Chinese annual inflation slows to +1.9% in June, producer prices extend slide

Oil                                                                                              

Fundamentals: Financial investors are becoming increasingly pessimistic over oil prices as evidenced by figures showing that they cut their bullish bets on rising ICE Brent crude by 14,787 lots in the week to July 5 to their lowest since February 16. A brief suspension in crude oil loadings from Iraq’s southern Basra terminal following a small pipeline leak which has now been repaired failed to offer any price support this morning. Meanwhile, Iran has followed in the footsteps of Saudi Arabia in cutting its August Light crude OSP for Asia by 40cts/bbl compared to July but at 45cts/bbl above the Oman/Dubai average, it remains at a small premium to the equivalent Saudi crude grade.

Technicals:  The market is in trouble but key supports on most contracts have held. WTI is below the 100 day MA at 44.88 but above the 200 day at 44.49. It needs a move confirmed by a close below 44.49 to green light the next leg lower to 42.25, a 50% c/p. Brent is below the pivotal 46.50 level but the 100 day at 45.88 and above the 200 day at 45.71. It would need a m/c below the latter to green light a leg down to 44.90. Heat is below 141.25 and a close below here would make a leg down to 137.62 likely. RBOB has held the key support at 135.47/27 and needs a m/c below 134.81 (200 day) to green light a move lower to 133.62. Aug’ Gasoil is above the 200 day MA at 411.25 and would need a m/c below there to activate a move south to 406.75. The stochastics are negative. The market could easily recover a bit, but is likely to fail again. 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.