Market Report & Analysis for 10/8/2018 Morning Edition

Morning Market Overview

Oil prices were hit with a strong round of selling Thursday possibly on a late reaction to Wednesday’s overall bearish US inventory snapshot as well as being caught in the down draft of what turned out to be a risk-off day as bond yields pushed higher for the second day in a row.

Although the upcoming installation of a new round of sanctions are still front and center today the market is once again visiting the talk that both Saudi Arabia and Russia have agreed privately that they would raise production to offset Iranian export losses. At this time, we see more potential bearish information evolving…

US total stocks building, increase in production from Saudi Arabia and the US with Wall Street in a bit of a flux which could have an impact on the global economy and thus global oil consumption. We believe the market is clearly overbought and seemed to be entering a bit of an upside euphoric state. Thursday’s round of profit taking selling is not surprising with further downside corrective moves modestly probable.

On the financial front global equity markets were mostly lower in reaction to the second uptick in bond yields. The EMI Index was lower for eight of the ten bourses in the Index.

The EMI Index decreased by 0.67 percent on the day. The year to date gain is now at 2.5 percent. Five 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 8.7 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 higher on the day with the Yen/USD and the Euro/USD mixed. Overall the currency markets were a negative for the oil complex.