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PVM Midday Report 15 July 2016

Published Friday, July 15th, 2016

  1. Chinese refinery crude throughputs hit record high on daily basis of 10.97 mbpd in June
  2. BoAML sees Brent and WTI rising to $55 and $54/bbl respectively by year-end
  3. Chinese 2Q GDP annual growth rate beats expectations at +6.7%, unchanged from 1Q
  4. UK construction output suffers worse-than-expected 2.1% m/m fall in May

Oil                                                                                              

Fundamentals: Figures releases earlier this week showing that Chinese crude oil imports fell by 5% on the month in June have seemingly not weighed on the country’s refinery activity after it was revealed that crude inputs averaged a record 10.97 mbpd over the same period. Meanwhile, Bank of America Merrill Lynch has raised its end-of-year Brent and WTI price targets to $55/bbl and $54/bbl respectively. Furthermore, its estimates that the respective crude benchmarks will average $61/bbl and $59/bbl in 2017 as the oil supply/demand balance shifts into a small deficit.

Technicals: The market is doing well. The dip did not last long this morning and RBOB is above both the 5 and 8 day MAs. These were dipped to, penetrated a bit, and then moved back over this morning. They are likely the key to the next leg and whilst RBOB is above them, around 140.45 and 139.87, the odds are on higher numbers across the board. All the rest need to do is m/c over the 5 and 8s around 45.49/68 WTI; 47.10/19 Brent; 141.34/142.01 Heat; 140.44/139.86 RBOB and 413.00 and 416.00 Gasoil. The stochastics are positive on RBOB and Brent. The former moved before Brent and has all the signs of delivering another positive early warning signal. Watch RBOB carefully today.

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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.