Morning Market Overview
At first glance this Tuesday morning we see firmness from yesterday continuing. Oil futures nearest delivery traded on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange advanced, with West Texas Intermediate settling at a four-month high in trading Monday afternoon, as Organization of the Petroleum Exporting Countries and its allies pledged to maintain 1.2 million bpd in production cuts under through the end of June.
At the market close, NYMEX April WTI futures were up $0.57 at $59.09 bbl ahead of the contract’s expiration Wednesday afternoon, with May delivery ending at a $0.29 bbl premium to the expiring contract. ICE May Brent futures settled up $0.38 to $67.54 bbl. NYMEX April RBOB futures surged to $1.8969 gallon a fresh 5-1/2 months high on the spot continuous chart, settling up 2.51cts at $1.8828.
April ULSD futures settled fractionally higher at $1.9678 gallon, holding above support at the $1.9509 100-day moving average. Oil futures were bolstered following news OPEC+ would keep their production cuts in place until the end of June, as it points to bloated commercial oil inventories held by the 35-country bloc Organization for Economic Cooperation and Development. Saudi Energy Minister, Khalid al-Falih said that as long as the levels of inventories are rising and the markets are far from normal levels, OPEC will stay the course, guiding the market towards balance.
According to International Energy Agency, commercial stock levels in the OECD countries remained above the five-year average in January, with 8.6 million bbl increase in the profiled month pushing the inventory level to 2.88 billion bbl. Major U.S. equity indices continued higher Monday afternoon with the Dow Jones Industrial Average gaining 65.23 points to 25,914 late session, while the S&P 500 Index added 0.37% on the session ahead of the Tuesday-Wednesday Federal Open Market Committee meeting, which will include an update on the economic outlook.
Federal Reserve members are expected to announce that there will be little or no tightening in monetary policy through higher interest rates in 2019. In December the central bank hiked the federal funds rate to 2.5% causing an extensive selloff in equities and oil futures. Global oil market has been under continued pressure from concerns slower economic growth would reduce demand.