Market Report & Analysis for 5/25/2018 Morning Edition
Morning Market Overview
Oil trading was choppy Wednesday after an overall bearish weekly inventory snapshot as total combined stocks of crude oil and refined products increased modestly last week with PADD 3 (Gulf Coast) stocks moving back above the five- year average level. That said total combined stocks as well as total US crude oil stocks are still below the OPEC objective or the five-year average.
By the end of the day the spot Brent contract and the June ULSD futures moved into positive territory with WTI and RBOB gasoline still on the negative side of the ledger. The action in the market was mostly in sync with the inventory snapshot showing a build in crude oil and RBOB gasoline with a small draw in distillate fuel.
One week does not make a trend but the caution flag is flying after total combined stocks increased (although still below the five- year average) and are now around 11 million bbls above the lows hit in the first half of April of this year. The evolving geopolitical risk in both the Middle East and in Venezuela remains in the forefront with nothing changing insofar as the level of risk to crude supply from both regions.
The only comfort is comments that have come from various OPEC members over the last few days indicating a strong possibility of increasing production if supply is restricted from Iran or Venezuela. This topic is on the agenda for the June OPEC meeting. On the financial front global equity markets were mixed and trading in a choppy uncertain pattern.
The EMI Index was lower after a recovery in US equities but offset by declines in Europe and Asia. The EMI Index decreased 0.14 percent on the day with the year to date gain at 3.6 percent. Eight of the ten bourses in the Index are in positive territory for 2018 with China still holding the worst performing spot in the Index with Brazil in the top spot with a 8.3 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 is lower on the day with the Yen/USD and the Euro/USD mixed. Overall the currency markets were a positive price driver for the oil complex.