Morning Market Overview

Most asset markets recovered some of Monday’s opening week losses including the oil complex. Oil ended the pre-inventory report trading period higher but still well below Friday’s settle prices.

Traders were waiting for the start of the inventory report cycle and as such approached Tuesday’s trading cautiously as the externals remain volatile and uncertain at best. The industry is expecting a build in crude oil with draws in refined products which is likely to result in a small drawdown in total US combined stocks. Most global equity markets were lower, but a recovery started in the US markets (where Monday’s selling began).

The US Dow recovered about 75 percent of yesterday’s losses in what can only be deemed as a very uncertain trading environment. The market is moving strongly in both directions on little other than the perception of what might be… trade war and/or inflation as the two most sited risks. The US Dollar Index also flipped back to the upside after declining yesterday.

The externals were a mixed picture for commodities and oil. Equities were a positive price directional driver while the US dollar was negative. On the financial front global equity markets were mostly lower around the world with the US markets trading significantly higher throughout the session. The EMI Index decreased by 0.07 percent with the year to date gain now at 1.4 percent. Two of the ten bourses in the Index are still in positive territory for 2018. London is in the worst performing spot in the Index with Brazil in the top spot with a 10.4 percent gain for the year. The marginally lower value direction in global equity markets was a neutral but the recovery of the US equity complex provided upside price support for the oil complex.

On the currency front the US dollar Index was higher for the day with the Yen/USD and the Euro/USD lower. Overall the currency markets were a negative price driver for the oil complex.