Market Report & Analysis for 4/18/2018 Morning Edition
Morning Market Overview
Last week oil prices surged higher with crude up by over $5/bbl for the week. On Monday oil prices were lower in what appears to be a round of profit taking selling as the Syrian event is now in the background as the threats by Russia have not materialized yet. The geopolitical risk evolving in the Middle East has not dissipated nor gone away. It is still at an elevated level, but the market has stepped back the view that an oil supply disruption is imminent.
On the external front both equities (US equities) and the direction of the US dollar were mixed for oil.
When one views a basket of equity values today (see below for the EMI Index) the average of the major markets was a negative for oil prices. On the other hand, the US equity market was strongly higher today. Depending on what is included in the analysis one can also view the externals as a mixed picture or even a positive driver for oil. Adding a bit of fundamental negativity to oil the EIA indicated yesterday that May US shale production is expected to increase by another 125,000 bpd in May.
The projection was reported in the EIA’s monthly drilling productivity report. Of interest about 58 percent of the May gain in shale production is expected to come from the very prolific Permian Basin region. On the financial front global equity markets were mixed on Monday.
The EMI Index though was unable to end the day in positive territory even with a modest gain in US equities. The EMI Index declined 0.84 percent on the day with the year to date gain is at 1.7 percent. Three of the ten bourses in the Index are still in positive territory for 2018 with London holding the worst performing spot in the Index with Brazil in the top spot with an 8.5 percent gain for the year. The negative value direction in global equity markets was a negative price driver for the oil complex.
On the currency front the US dollar Index traded 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.
