Afternoon Market Overview

Crude oil prices ended Monday slightly higher on a combination of a recovery in equity values as well as a decline in the US dollar.

Refined product prices remained under pressure suggesting that the recovery in oil prices was mostly driven by the externals (equity and US dollar) rather than any fundamental support. In fact, this morning OPEC released their oil forecast which was slightly biased to the bearish side as they indicated that oil demand will grow in 2018 but non-OPEC supply will also be growing modestly.

Oil prices are still struggling after last week’s bearish EIA STEO report as well as two bearish weekly oil inventory snapshots in a row and with another small build forecast for this week’s report. Inventories may now be in a transition as the refining sector approaches the spring maintenance season when refiner demand for crude oil will decline. For the short term we expect oil prices could drift further with a test of the around the $55/bbl level for the spot WTI contract.

On the financial front global equity markets were mixed around the world with the US markets staging a strong comeback yesterday. The Index still decreased marginally with the US market trading higher through most of Monday’s trading session. The EMI Index decreased by 0.12 percent with the year to date loss at 0.1 percent. Only one of the ten bourses in the Index are still in positive territory for 2018. London is in the worst performing spot in the Index with Brazil in the top spot with a 5.9 percent gain for the year. The slightly lower value direction in global equity markets is a neutral 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 mixed. Overall the currency markets were a positive price driver for the oil complex.