Market Report & Analysis for 12/12/2018 Morning Edition

Morning Market Overview

Oil prices were strongly lower Monday as the wild ride in the financial markets continued and at least temporarily offset the new OPEC production cutting accord, the Canadian reduction in production and yesterday’s force majeure in Libya impacting around 300,000 bpd of oil.

Oil supply fundamentals are biased to the supportive side with the market now more focused on the demand side of the equation especially with global equities getting pounded for the last several weeks suggesting that the global economy could be slowing.

Oil prices gave back a major portion of the post OPEC meeting bounce from Friday with the spot WTI contract hovering in the low $50’s. This week all three public agencies… EIA, IEA and OPEC will release their monthly oil projections beginning with EIA STEO report mid-day today. Traders and analysts will be scrutinizing the reports very closely as they will all include the impact of the recently announced supply cuts. The market is anxious to see when the projections indicate that the inventory building pattern will switch to a sustainable destocking pattern.

On the financial front global equity markets were lower across the board except for a small gain in the US.

The EMI Index was lower by 1.63 percent for the day with the year to date loss at 1.4 percent. Only one 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 12.5 percent gain for the year. The lower value direction in global equity markets was a negative price driver for the oil complex. On the currency front the US dollar Index was higher for the day with the Yen/USD and the Euro/USD mixed. Overall the currency markets were a negative price driver for the oil complex last week.