Morning Market Overview

As the OPEC meeting draws closer and ahead of this week’s inventory snapshot crude oil and RBOB drifted lower while ULSD was marginally higher with a bout of cold temperatures on the way in the main heating oil area of the US. Overall trading activity seemed light Tuesday as most market participants await Thursday’s key decision by OPEC and participating non-OPEC producers on whether they will extend the production cut thorough 2018.

We remain of the view that the cut will be extended with OPEC leaving some wiggle room regarding raising production if prices move too high. We do not expect them to postpone the decision as it will result in a strong and quick price sell-off. In the meantime, there is likely a bit of buyer remorse starting to set into the complex as some participants are expecting a buy the rumor sell the fact reaction to an announcement that the deal has been extended.

In addition, we believe there are buyers waiting on the sidelines for a downside correction. On the financial front global equity markets were mostly higher yesterday as the US tax cut moved a tad closer to reality. The Index traded higher with the US markets trading in positive territory throughout the US trading session.

The EMI Index increased by 0.24 percent with the year to date gain hovering around 19.4 percent. All ten bourses in the Index remain in positive territory for 2017. London is in the worst performing spot in the Index with Hong Kong still in the top spot with a 34.9 percent gain for the year. The higher value direction in global equity markets was a positive price driver for the oil complex.