Market Report & Analysis for 10/26/2018 Morning Edition

Morning Market Overview

On Wednesday NYMEX nearest delivered oil futures ended mixed and the December Brent contract on the Intercontinental Exchange settled at a fresh two-month spot low amid easing supply concerns and data showing slowing economic growth, while equities were again in the loss column.

NYMEX oil futures were boosted by weekly supply data released midmorning from the Energy Information Administration showing larger-than- expected drawdowns in gasoline and distillate inventories during the week- ended Oct. 19. Another large build in crude supply, up 6.3 million bbl to a four-month high, was bearish, although 1.2 million bbl of that supply was from the Strategic Petroleum Reserve. Implied demand for oil products surged during the week profiled, up 1.531 million bpd to a 21.491 million bpd seven-week high.

Cumulatively in 2018 through Oct. 19, implied demand for oil products is up 529,000 bpd or 2.6% compared with the year-ago pace. The bullish products data and expectations lower oil prices would incite greater demand was countered by bearish economic data out of Europe, while in the United States the Federal Reserve’s Beige Book showed a more cautious outlook.

The eurozone PMI composite flash index for October dropped from 54.2 to 52.7, and was below consensus for a more modest decline to 53.9. Manufacturing declined from 53.3 to 52.1 and below expectations for a 53.0 reading, and service fell from 54.7 to 53.3 with projections anticipating a reading of 54.6. “Economic activity expanded across the United States, with the majority of Federal Reserve Districts reporting modest to moderate growth,” read the Beige Book released this afternoon, and warned about trade uncertainties, rising materials and shipping costs, and difficulties in finding qualified workers.