Market Report & Analysis for 2/18/2019 Morning Edition

Morning Market Overview

Oil prices were higher for the third trading session in a row Thursday with the RBOB contract leading the complex higher. The upward move was dampened a bit by the much lower than expected retail sales number in the US which sent equity prices lower in the early trading session but were able to recover some of the losses by the afternoon. The complex remains in a mild uptrend with the strong production cuts from OPEC and its partners offsetting most of the talk of the slowing global economy.

The American Petroleum Institute has reported consumer gasoline demand, as measured by total motor gasoline deliveries, averaged 8.9 million bpd for the month of January, 2.7% lower than the prior month but 1.9% more than January 2018 and the strongest for January since 1945. Demand for reformulated-type gasoline, which is consumed primarily in urban areas, increased 0.9% year-over-year to 2.9 million bpd in January. By contrast, conventional gasoline is used more in rural areas and rose 2.4% year-over- year to 6.0 million bpd. API data show January distillate deliveries were 4.2 million bpd, 2.4% higher than a month earlier but 3.3% lower than January 2018. About 96% of distillate demand in January was for ultra-low sulfur distillate, which was driven by road freight transportation activity.

According to API, the remaining 4.0% of distillate demand was high sulfur distillate fuel, which is a heating fuel in the residential and commercial sectors and a marine fuel when blended to upgrade heavy fuel oil. In January, HSD deliveries tumbled by 30.8% versus the month prior and 17.4% versus those of January 2018. API said this was the lowest HSD demand on record for the month of January. On the financial front global equity markets were mostly lower around the world.

The EMI Index was lower by 0.23 percent for the day with the year to date gain at 8.5 percent.

All ten bourses in the Index are in positive territory for 2019 with Germany holding the worst performing spot in the Index with Hong Kong in the top spot with a 10 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 positive price driver for the oil complex.