Morning Market Overview
Prices are soaring this morning. To start, this is a historic week for the US oil sector. We believe it is the first time since the EIA has been keeping data that total net imports/exports of combined crude oil and refined products showed the US net exported 211,000 bbl of oil.
This has happened in a non-hurricane/unplanned event or simply a normal operating week. This is an ongoing dilemma for OPEC and we are certain it is something they are looking at in their discussions today. This is the beginning. It will not be like this every week in the short term, but as new pipeline capacity comes on stream in 2019 from places like the Permian more and more crude oil will quickly end up at export terminals in the US Gulf with exports then rising steadily.
At that time net exports from the US will grow. Yesterday oil prices were on the defensive driven by uncertainty as to the outcome of the OPEC/non-OPEC meetings now underway in Vienna as well as the negative signals coming from the tremendous selling in global equities.
This morning we are hearing OPEC has tentatively agreed to an oil output cut and has gained a commitment from Russia and other non-OPEC participants for a total 1.2 mmbbl/day volume reduction. Stay tuned as today should be very interesting as the market continues to digest the news. On the financial front global equity markets were lower across the board.
The EMI Index was lower by 1.19 percent for the day with the year to date gain at 0.8 percent. Only two of the ten bourses in the Index are in positive territory for 2018 with China holding the worst performing spot in the Index with Brazil in the top spot with a 16.3 percent gain for the year. The lower value direction in global equity markets today was a negative price driver for the oil complex.
On the currency front the US dollar Index was lower for the day with the Yen/USD and the Euro/USD higher. Overall the currency markets were a slight positive price driver for the oil complex last week.