Market Report & Analysis for 3/2/2018 Morning Edition
Morning Market Overview
The market is continuing where it left off this Thursday morning as we are seeing the entire complex in a down mode. Oil prices were strongly lower Wednesday on a combination of a bearish weekly fundamental snapshot released by the EIA and bearish externals.
On the external front equities were modestly lower while the US dollar was higher versus most currency pairs both of which are negative price directional drivers for the oil complex. On the fundamental front the EIA reported a larger than expected build in crude oil stocks and a build in total combined stocks of crude oil and refined products. The total inventory build was not very large, but it is interrupting the longer-term destocking trend that has been in play since early last year.
As we have been mentioning for weeks the industry is in the midst of a transition as refiners enter the lower crude oil demand refinery maintenance season. It is still unclear how the transition period will play out.
Contributing to the build was a modest increase in crude oil imports along with a strong decline in crude oil exports while refinery run rates decreased slightly. On a positive note total combined oil stocks are still significantly below the high hit back in February of 2017 and approaching OPEC’s objective level of the five-year average.
On the financial front global equity markets were lower around the world with the US markets losing value today as equity market players remain uncertain over how aggressive the US Central Bank will be with raising short term interest rates this year. The Index was lower with the US market lower throughout most of the trading session. The EMI Index decreased by 1.05 percent with the year to date gain now at 4.2 percent. Four of the ten bourses in the Index are still in positive territory for 2018.
London is in the worst performing spot in the Index with Brazil in the top spot with a 12.8 percent gain for the year. The lower value direction in global equity markets is a negative price driver for the oil complex.
