Market Report & Analysis for 2/12/18 Afternoon Edition

by | Feb 12, 2018 | EMI, Fuels & Markets, FutureRack, Industry News

Afternoon Market Overview

As Friday afternoon progresses the market continues a hard move down. The front WTI contract is well below $60 and refined products are off more than a 6 cents on both gasoline and diesel.

Today reinforces Thursday which was another day of extreme volatility in the global equity markets which sent oil prices strongly lower on the day. Not much new on the fundamental side as the market continues to digest yesterday’s bearish weekly EIA inventory snapshot that reported a surge in US crude oil production to a record high level of well over 10 million bpd.

Yesterday’s trading in the oil complex is a continuation of the significant changes that have taken place since last Friday in the global equity arena with a full-blown correction underway.

Clearly the market is in good news translates to bad news for equities. For example, the day’s US jobless claims were the lowest in years sending concerns in the financial market that such good data could result in the US Fed raising interest rates more aggressively.

We remain of the view that we are in a correction and not at the beginning of a bear market for equities or oil. At some point the volatility will ease and the selling will subside. The bottom line… the US and broader global economy as well as corporate profits are all doing very well. The US is no where near a recession nor is there runaway inflation. Uncertainty and profit taking selling has dominated the financial complex.

On the financial front global equity markets were mostly lower around the world with the US markets hit with a very strong round of selling. The Index decreased with the US market trading lower through most of Thursday’s trading session. The EMI Index decreased by 1.3 percent with the year to date gain now at 0.6 percent. Only two of the ten bourses in the Index are still in positive territory for 2018.

Canada is in the worst performing spot in the Index with Brazil in the top spot with a 6.7 percent gain for the year. The lower value direction in global equity markets is 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.