Market Report & Analysis for 5/14/2018 Morning Edition

Morning Market Overview

Oil prices recovered all the initial post-Iranian nuclear deal pullout announcement losses and then some on Wednesday with prices continuing to move higher in early trading on Thursday morning.

After the initial round of profit taking selling right after the deal announcement market participants digested the news and came to a quick conclusion that the geopolitical risk increased and the possibility for a disruption in oil flow from Iran could occur in the coming months. Adding to the risk factor in the Middle East was an exchange of missiles between Iran and Israel thus elevating the potential for an oil disruption.

The weekly EIA inventory snapshot also helped support prices (see this afternoon more details) as total combined stocks of crude oil and refined products declined on the week and thus easing the concern (at least for now) that the inventory destocking pattern is still in play. On the financial front, global equity markets were mixed coming into Thursday’s trading session. The EMI Index is higher after a modest gain in US equities.

The EMI Index increased 0.70 percent on the day with the year to date gain at 3.8 percent. Five of the ten bourses in the Index remain in positive territory for 2018 with China still holding the worst performing spot in the Index with Brazil in the top spot with a 10.3 percent gain for the year. The positive value direction in global equity markets today was a positive price driver for the oil complex.

On the currency front, the US dollar Index is lower on the day with the Yen/USD and the Euro/USD higher. Overall the currency markets are currently a positive price driver for the oil complex.