Morning Market Overview

Oil prices pushed strongly higher Tuesday ahead of the start of the weekly inventory report cycle. The market is now trading at the highest level for the month as geopolitical concerns are slowly moving to the forefront as global inventories continue to recede.

The latest concerns are coming from the Middle East, in particular between Saudi Arabia and Iran. In addition, market participants are becoming more convinced that Venezuelan oil production is going to continue to decline as the chaos in the country continues to increase.

Oil prices received a boost from a moderate recovery in equity values after Monday’s strong equity sell-off in the US. However, the US dollar was higher versus most currency pairs capping the external gains in oil prices coming from the equity complex.

On the financial front global equity markets were mostly higher around the world with the US markets modestly higher.

The EMI Index increased by 0.25 percent with the year to date gain now at 2.9 percent. Three 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 10.2 percent gain for the year. The higher value direction in global equity markets is a positive 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 lower.

Overall the currency markets were a negative price driver for the oil complex.