Market Report & Analysis for 10/31/2018 Morning Edition
Morning Market Overview
New York Mercantile Exchange oil futures nearest delivery and Brent crude on the Intercontinental Exchange settled mixed, with RBOB futures the only contract to advance into the close after plunging to an eight-month low last week, while the crude contracts came under pressure on concern slowing world economic growth would weigh on global oil demand.
After choppy trading, West Texas Intermediate and Brent crude succumbed to a bout of late afternoon trading alongside a downward reversal in major equity indices seen triggered by news that the United States would add more tariffs on Chinese goods if the next meeting between the two countries fails to yield results. It was also unclear if U.S. President Donald Trump and Chinese President Xi Jinping would even discuss trade when they meet in Argentina Nov. 30-Dec. 1 at the G20 meeting.
Equities reversed early gains and turned lower, with the Dow Jones Industrial Average down nearly 500 points in late trading to a fresh nearly four-month low. The late day selloff kept alive concern over global economic growth, with the U.S.-China trade dispute shaking confidence and seen as a drag on the world economy.
Slowing economic growth would pressure global oil demand, which is already seen lower in the first quarter following expectations from the International Energy Agency for record high demand in the current fourth quarter at 100.2 million bpd. Globally, oil demand peaks in the fourth quarter and is weakest in the first quarter, with IEA earlier this month projecting world oil consumption of 98.9 million bpd during the first three months of 2019.
The long bet for oil by speculators driven in large part by U.S. sanctions on Iranian oil exports that take effect in less than a week have been liquidated, with the market now seen in balance as Saudi Arabia pumps all out. The Saudis tossed their playbook, and are revving up crude production to 11.0 million bpd, with output reaching 10.7 million bpd last week, as the kingdom looks to pacify critics after revelation that a Saudi dissident and critic of Crown Prince Mohammad bin Salman was murdered in the Saudi Consulate in Istanbul, Turkey.
