Market Report & Analysis for 7/2/2018 Morning Edition
Morning Market Overview
Prices are seen mixed this Friday morning with crude showing a bit of weakness while refined products have some support. Oil put in a mixed session on Thursday as well albeit crude oil was mostly higher on the day and refined product prices drifted slightly lower. The strong round of moves higher in prices may be starting to slow as most shorts have likely been driven out of the market already and new long side entries may be starting to dry up.
There may also be some book squaring going on in the US as a lot of traders take the July 4 week as a vacation week. Not much new on the oil front and the catalysts that have been driving prices over the last week or so. Sanctions on Iran, deteriorating Venezuelan economy, power outages in Canadian Syncrude producing area, Libyan unrest and several others remain in play. On the other side of the equation the agreed upon increase in OPEC and several of their non-OPEC partners is a bearish indicator but not bearish enough to offset the myriad of risk factors currently impacting global oil production to the downside. As we head toward the weekend and what will likely be a coming week with lower than normal trading liquidity in the US the market sentiment remains cautiously bullish.
It does not mean oil prices are going nowhere but up rather it means we are in a market environment where the trade will likely look to buy dips rather than sell rallies versus the opposite which was the direction just a month or so ago. On the financial front global equity markets were mixed with some short covering starting to enter some of the markets as the weekend approaches. Not much has changed with level of uncertainty remaining at an elevated level.
The EMI Index was higher with gains in only four of the ten bourses in the Index. The EMI Index was higher by 0.53 percent on the day with the year to date loss at 4 percent. Only one of the ten bourses in the Index are still in positive territory for 2018 with China still in the worst performing spot in the Index with Australia in the top spot with a 4 percent gain for the year. The positive value direction in global equity markets was a positive price driver for the oil complex. On the currency front the US dollar Index is higher on the day with the Yen/USD and the Euro/USD lower. Overall the currency markets were a negative price driver for the oil complex.