Market Report & Analysis for 8/15/2018 Morning Edition

Morning Market Overview

Oil prices started the week on the defensive with the complex ending the day lower except for a small gain in the ULSD contract. The market pared its losses ending the day well above the intraday lows. The selling accelerated early in the session after Genscape reporting the first build in Cushing crude oil stocks after 12 weekly draws in a row.

The build in Cushing raised concern in some market quarters that demand may be stating to ease. We think it was a bit of an overreach as the Cushing draw over the last several months was driven by a decline in Canadian production due to power issues in July at the Syncrude producing facilities. Also, from a seasonal perspective we are not far away from the fall refinery maintenance season. As refineries lower utilization rates at local refineries inventories tend to increase. It is difficult to view the situation as a structural change in the overall supply and demand pattern… just yet.

On the financial front global equity markets were mostly lower. The EMI Index was lower for nine of the ten bourses in the Index. The EMI Index decreased by 0.01 percent on the day with the year to date loss at 1 percent. Five 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 4.6 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 mixed. Overall the currency markets were a slight positive price driver for the oil complex.