Morning Market Overview

The spot Brent contract toyed with the $70/bbl threshold Tuesday as it worked its way to a high of $70.21 and remained marginally above $70/bbl prior to the release of the API inventory data only to drop back below this level after a bearish API crude data point.

A positive presentation by the head of the IMF projecting strong global economic growth for at least 2018 and 2019 was released. This boosted the view of bulls as strong global economic growth will result in stronger than expected growth in oil consumption.

A larger percentage of the global economic growth is projected for the developing world economies which are even more energy sensitive economies. The market sentiment was a bit shaken last week after the IEA oil market report but now seems to be regaining its upside strength based on the IMF economic growth forecast and what looks like a view that Saudi Arabia is ready for the long haul with the production cutting accord.

This afternoon the API started the weekly inventory report cycle started with a mixed inventory snapshot. Crude oil showed a surprise build in inventory after nine weeks in a row of drawdowns. Gasoline stocks built more than expected and distillate fuel inventories declined within the range of expectations. The total combined inventories of crude oil and products were modestly higher on the week.

Overall the market gave back some of its intraday gains for RBOB and crude oil but added to the gains in ULSD after the report was issued. On the financial front global equity markets were mixed. The Index increased with the US markets trading either side of unchanged throughout most of the trading session. The EMI Index increased by 0.09 percent with the year to date gain now at 5.6 percent.

Nine of the ten bourses in the Index are now in positive territory for 2018. Australia is in the worst performing spot in the Index with Hong Kong in the top spot with a 10.1 percent gain for the year. The higher value direction in global equity markets was a positive price driver for the oil complex.

On the currency front the US dollar Index was lower for the day with the Yen/USD and the Euro/USD higher. Overall the currency markets were a positive price driver for the oil complex.