Morning Market Overview

After declining last week oil prices started the new trading week strongly higher on Monday.

The drivers were threefold. First several bullish comments at an industry conference in Houston from OPEC oil ministers and others brought our new buyers into the market. In addition, the IEA released their annual oil outlook suggesting that oil demand will grow at a robust rate through 2023 and OPEC may not be able to significantly increase its oil production.

On the external front global equities recovered for a second day in a row adding upside price support to the oil complex. The IEA report went on to say, “The United States is set to put its stamp on global oil markets for the next five years,” said Dr. Fatih Birol, the IEA’s Executive Director. “But as we’ve highlighted repeatedly, the weak global investment picture remains a source of concern. More investments will be needed to make up for declining oil fields – the world needs to replace 3 mb/d of declines each year, the equivalent of the North Sea – while also meeting robust demand growth.”

On the financial front global equity markets were mixed around the world with the US markets strongly higher as equity market players remain uncertain over how aggressive the US Central Bank will be with raising short term interest rates this year. The Index was marginally higher with the US market higher throughout most of the trading session.

The EMI Index increased by 0.05 percent with the year to date gain now at 2.7 percent. Two of the ten bourses in the Index are still in positive territory for 2018. Japan is in the worst performing spot in the Index with Brazil in the top spot with a 12.5 percent gain for the year. The lower value direction in global equity markets is a negative price driver for the oil complex.