Market Report & Analysis for 11/2/2018 Morning Edition

Morning Market Overview

The energy complex is trading mixed to softer as of this writing waiting for the latest weekly EIA report. Ahead of the start of the weekly oil inventory cycle oil prices were once again trading from the negative side of the ledger even as global equity values rebounded modestly.

The US dollar moved higher once again versus most major currency pairs offsetting some of the positives from the increase in equity values. Oil prices have been in a clear downtrend since peaking in early October and are hovering near the downward sloping trading channel support area.

The spot WTI contract is trading near the levels it was at back in the middle of August. With the official placement of sanctions on Iran less than a week away the market does not seem to be the least bit concerned that there will be any supply or logistics issues after the sanctions are in place.

Currently US stocks are above the five-year average level as they are in other places around the globe. Tuesday afternoon the API started the weekly inventory report cycle with a larger than expected build in crude oil with draws in refined products within the market expectations. Total combined inventories of crude oil and products were modestly lower on the week.

Overall the market shed some of its pre-API report losses after the API inventory report release hit the media airwaves. We are maintaining our overall oil view and short-term bias at cautiously bearish. The current fundamentals are becoming less supportive as supply and demand may not be as impacted by Iranian sanctions as the market originally estimated.