Morning Market Overview

The oil complex traded in negative territory throughout Thursday’s session primarily driven by the third consecutive strongly negative day in the equities markets but offset slightly by a falling US dollar.

The level of uncertainty was elevated once again as the new Federal Reserve chairman testified before the US Senate. His comments were mostly in sync with his testimony a few days ago before the US House panel. His comments did not suggest the US is on the cusp of runaway inflation.

In fact, he suggested that the economy was growing and not overheated and there was still room for labor gains. The market was also hit with comments by President Trump who indicated he would place tariffs on steel and aluminum next week sometime. This raised the possibility of a trade war.

Again, much like the markets reaction to Chairman Powell’s comments we think all of this is overblown and the market is overreacting. That said the market is in a risk off mode and we will have to wait and see how the dust settles over the next week or so. On the financial front global equity markets were lower around the world with the US markets losing value as equity market players remain uncertain over how aggressive the US Central Bank will be with raising short term interest rates this year. The Index was lower with the US market lower throughout most of the trading session.

The EMI Index decreased by 0.71 percent with the year to date gain now at 3 percent. Two 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 11.1 percent gain for the year. The lower value direction in global equity markets is a negative price driver for the oil complex.