Market Report & Analysis for 10/29/2018 Morning Edition

Morning Market Overview

Oil prices were mostly higher for the second day in row Thursday recovering some (not all) of Tuesday’s strong decline. Not much new on the geopolitical front with market participants still looking at the impact of new sanctions on Iran against a backdrop of inventories building.

In fact, OPEC said today that with supply projected to be very comfortable and the potential for a surplus in Q4 they may have to adjust their production strategy and possibly lower production again to not let growing inventories overtake the market. Oil prices are still strongly below the high hit in early October while US total combined stocks of crude oil and refined products have been in a building mode and are above the five-year average for the last eleven weeks in a row.

Recall OPEC has targeted keeping oil stocks at or below the five-year average. That was accomplished but inventories have been steadily building since hitting a low earlier in the year. On the financial front global equity markets were mostly higher in the west after Asia traded in negative territory.

The EMI Index increased by 0.50 percent on the day. The year to date loss is now at 1.1 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 still in the top spot with a 11.4 percent gain for the year.

The positive value direction in global equity markets was a positive price driver for the oil complex. On the currency front the US dollar Index is higher on the day with the Yen/USD and the Euro/USD lower. Overall the currency markets were a negative for the oil complex.