Morning Market Overview

Crude and refined product markets are soaring this morning in reflection on yesterday’s OPEC meeting ending mostly with the outcome the market had anticipated. The deal will be extended through the end of 2018 with Nigeria and Libya now joining in the accord by capping their 2018 production at 2017 levels.

The market reaction to the outcome of the meeting is relatively muted as the result was mostly priced into the market for some time. The main risk that could have come from the meeting would have been a non- decision on extending the cuts. That did not happen and now the market will be focused on all fundamental data from weekly inventory snapshots to the round of monthly oil forecasts by the three agencies… EIA, IEA and OPEC.

Those that are already long the market will remain long if the fundamentals continue to show that the production cutting accord is working and inventories remain in a destocking pattern. If the fundamentals remain supportive it will also draw fresh buying that has been sitting on the sidelines. Baring any major bearish surprise, the downside price risk should be limited with further price appreciation expected going forward. On the financial front global equity markets were mixed Thursday.

The Index traded lower even with the US markets surging higher throughout the US trading session as the tax cut moves closer to reality. The EMI Index decreased by 0.67 percent with the year to date gain hovering around 17.8 percent. All ten bourses in the Index remain in positive territory for 2017.

London is in the worst performing spot in the Index with Hong Kong still in the top spot with a 32.6 percent gain for the year. The lower value direction in global equity markets yesterday were a negative price driver for the oil complex.