Morning Market Overview
Oil prices are on the defensive for the fourth trading day in a row after an overall bearish weekly EIA inventory report. Total combined stocks of crude oil and refined products increased modestly and are now 45.6 million bbls above the low hit in February of this year.
The massive destocking pattern that has been in play since OPEC and its non-OPEC partners agreed to cut production has slowed/shifted now that they are increasing production. Market estimates circulating around the media airwaves pegs OPEC August production near a 10-month high now that they have embarked on a different production strategy as they try to bring stability to the price. That is a challenging objective with many different definitions.
Saudi Arabia recently indicated they are targeting a price range of $70 to $80/bbl. The spot Brent continuation contract has traded in the $70 to $80/bbl range since early April. Going forward it will be a delicate task as production levels increase while Iranian exports are starting to fall in anticipation of the US sanctions. However, today Reuter’s reported that the US will consider waivers for Iranian oil buyers such as India but not an indefinite waiver. On the financial front global equity markets were mostly lower.
The EMI Index was lower for eight of the ten bourses in the Index. The EMI Index decreased by 0.110 percent on the day with the year to loss at 2.2 percent. Three 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 the US in the top spot with a 5.2 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 positive.