Market Report & Analysis for 12/19/2018 Morning Edition

Morning Market Overview

Oil prices were hit with another strong round of selling to start the new trading week as was just about every asset class around the world. Global equities declined sharply in most locations and even with the US dollar Index higher on the day it was not enough to offset the negativity from the equity markets or slow the selling in the oil pits. The volatility from the financial markets is not likely to subside this week as the US Central Bank meets with a high probability that they will raise short term interest rates once again on Wednesday.

Despite the supply cuts announced over the last two weeks oil market participants are more focused on the potential decline in global oil demand as global economic concerns are mounting as evidenced the way the global equity market has been trading for the month of December (so far).

The spot December WTI contract has settled below the psychological $50/bbl threshold for the first time since October 2017. Currently the short-term direction of oil prices will be mostly driven by what happens in the global financial markets as December winds down.

On the financial front global equity markets were mostly lower. The EMI Index was lower by 0.86 percent for the day with the year to date loss at 1 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 14 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.