Market Report & Analysis for 5/24/2018 Morning Edition
Morning Market Overview
Ahead of the start of the weekly oil inventory reporting cycle oil prices were mixed. Crude oil started out the session strongly higher with the spot Brent contract trading above $80/bbl on an intraday basis but drifted lower as Reuter’s reported OPEC may consider raising production at the June meeting to offset concerns over potential Iranian sanctions as well as the deteriorating economy of Venezuela.
A Gulf source told Reuter’s all options will be on the table at the June meeting. Even with crude oil prices drifting lower (refined product prices remained in positive territory) the market views the oil price risk as still biased to the upside even after the comments regarding the June OPEC meeting. However, we remain of the view that Iranian production is not likely to decline significantly over the next three to six months and as we said and somewhat confirmed today OPEC will fill any gap that may arise from either Iran or Venezuela.
Tuesday afternoon the API started the weekly inventory report cycle with a smaller than expected draw in crude oil, a surprise build in gasoline stocks, with distillate fuel inventories declining within the market expectations Total combined inventories of crude oil and products were lower on the week. Overall the market held steady since the report was issued.
On the financial front global equity markets were mixed yesterday.
The EMI Index was lower after a modest decrease in US equities and a strong decline in Brazilian stocks. The EMI Index decreased 0.64 percent on the day with the year to date gain at 3.8 percent. Eight of the ten bourses in the Index are in positive territory for 2018 with China still holding the worst performing spot in the Index with Brazil in the top spot with a 7.1 percent gain for the year.
The negative value direction in global equity markets was a negative price driver for the oil complex. On the currency front the US dollar Index is lower on the day with the Yen/USD and the Euro/USD higher. Overall the currency markets were a positive price driver for the oil complex.
