Morning Market Overview
The oil complex started Friday’s trading session higher but was eventually dragged down as US equities turned negative even after better than expected economic data. When the dust settled the complex was still able to end the week with the first weekly gain after three weekly declines in a row. The geopolitical risk for further oil supply interruptions remains at an elevated level with the latest event a temporary shutdown by Saudi Arabia of shipping its oil through the straits of Bar – al Mandeb.
The decline in US equities came after a very strong GDP number for the second quarter of 4.1 percent suggesting the US economy is growing at the fastest rate in four years. We believe the main reason for the selling in US equities was a bit of buy the rumor sell the fact on the GDP number as well as some disappointing earnings number coming from the tech sector as well as mainstream corporations like Exxon.
Friday afternoon the latest Baker Hughes data hit the media airwaves reporting the number of rigs deployed to the US oil sector increased by 3 rigs on the week after coming in lower during the previous week. Total rigs deployed to the oil sector are lower by 95 or 12.4 percent year over year. Total US crude oil production is about 17.9 percent above where it was for the same week a year ago. This week’s production came in at 11 million bpd.