Market Report & Analysis for 6/29/2018 Morning Edition
Morning Market Overview
The oil rally continued another day Wednesday with the spot WTI contract trading at the highest level since 2014. The market continues to be driven over the growing concerns of declining Iranian and Venezuelan exports along with Canadian Syncrude issues.
Another level of support came from an overall bullish weekly EIA oil inventory report that showed total combined stocks of crude oil and refined products declined by 4.6 million barrels led by a 9.9 million decline in total US crude oil stocks. Oil prices are now trading above the level they were trading at just before OPEC/non-OPEC announced their almost 1 million bpd production increase last Friday. Compared to last Thursday’s settle the spot WTI contract is higher by almost $7/bbl while the spot Brent contract is higher by around $4.40/bbl over the same period.
For now, the market has mostly discounted the OPEC production increases and has turned their focus mostly to the ongoing production declines in select locations with the possibility of the declines not only lingering but growing in magnitude. The market sentiment has clearly turned to the cautiously bullish side. On the financial front global equity markets were mostly lower as tariff discussions dominated market participants concern. Uncertainty over the outlook for the global economy in a world that could potentially be embroiled in a trade war is keeping many long side equity traders and investors on the sidelines despite solid nearby economic data points.
The EMI Index was lower with losses in seven of the ten bourses in the Index. The EMI Index was lower by 0.81 percent on the day with the year to date loss at 4.6 percent. Only two of the ten bourses in the Index are still in positive territory for 2018 with China still in the worst performing spot in the Index with Australia in the top spot with a 3.7 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 higher on the day with the Yen/USD and the Euro/USD lower. Overall the currency markets were a negative price driver for the oil complex.