PVM Midday Report 13 June 2016
Headlines
OPEC hints at tighter oil balance in 2H 2016; output down 100,000 bpd in May
Chinese implied oil demand falls by 380,000 bpd in May y/y to 10.24 mbpd
Iran’s biggest oil…
As the US celebrated 240 years of independence from the British Empire, international markets were understandably quiet with both oil and equities drifting lower on the day. The UK political crisis deepened further yesterday as the leader of UKIP, the strongest advocate of Britain leaving the European Union, resigned. Under these circumstances sterling did extremely well to post a small gain on the day. The FTSEurofirst 300 index closed 0.57% lower and the FTSE-100 index lost 0.84% on the day. The Chinese stock market received some support from a jump in the country’s service sector index but other regional stock indices have traded lower.
Terrorist attacks in Iraq and Saudi Arabia over the weekend and yesterday failed to lend support to oil prices as economic and demand concerns coupled with bearish supply-side developments sent Brent 25 cents/bbl lower yesterday whilst ICE WTI finished 23 cents/bbl lower. Renewed selling is pushing the price of the European benchmark another 70 cents/bbl down this morning as macro-economic risk scares buyers away. The merger of the two National Oil Companies in Libya is a welcome step which provides us with a ray of hope that the OPEC member’s oil production might be recover in the not so distant future.
Further downward price pressure is expected as signs of an oversupplied global market refuse to go away. In the US two cargoes carrying gasoline-making components have been unable to discharge due to full storage in the area whilst other tankers have reportedly been diverted from New York to Florida and to the USGC as US gasoline production outpaces regional demand for the product in the middle of the driving season. On this side of the Atlantic we have received yet another confirmation on the war for market share between OPEC and non-OPEC producers as Iran claims to have sold 2 million bbls of crude oil to Poland.
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