Market Report & Analysis for 10/15/2018 Morning Edition

Morning Market Overview

Oil prices were pummeled again Thursday with sellers driven from several fronts. First the deep selling coming from the global equity markets portrayed a view that global economic growth may be easing and if, so it would impact global oil demand growth.

Adding to this view OPEC released their monthly oil projections (see below for the highlights) today indicating that they were lowering oil demand growth for the third month in a row. OPEC also suggested the market is well supplied with exposure to a crude oil surplus in 2019. Finally, today’s EIA weekly oil inventory snapshot was overall bearish as total combined stocks of crude and refined products built strongly for the second week in a row.

Total US stocks are now well above the five-year average and 79 million bbls above the low hit earlier this year. The sustainable uptrend that has been in play is changing with the downside correction likely to go deeper in the coming weeks even with the Iranian sanctions set to come into play in early November. On the financial front global equity markets were mostly lower on the day with large losses in most bourses around the globe.

The EMI Index was lower with the strongest percentage decline coming from China. The EMI Index decreased by 1.86 percent on the day.

The year to date loss is now at 0.8 percent. Only two 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 Brazil now in the top spot with an 8.8 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 higher. Overall the currency markets were a slight positive for the oil complex.