Market Report & Analysis for 6/8/2018 Morning Edition

Morning Market Overview

Oil prices were mostly lower Wednesday after a bearish weekly EIA oil inventory report that showed total combined stocks of crude oil and refined products increased by 15.8 million barrels for the third weekly build in a row.

The strong destocking pattern that has been in play for over a year appears to be coming to an end. Further dampening the enthusiasm of the oil bulls is yet another indication that Saudi Arabia and other participants to the crude oil cutting accord may increase production.

A Reuters article today reported on a discussion between India and their Saudi counterpart suggesting that a production change may be coming. Irrespective of what OPEC decides to do at the June 22 meeting currently the nearby fundamentals are getting more bearish by the week. Total crude oil and refined product inventories in the US are now 28.8 million barrels above the low hit just seven weeks ago.

With US crude oil production still increasing and setting a record high on a weekly basis OPEC may rethink increasing production as the market is starting to form the foundation for a short to medium term price downtrend.

On the financial front global equity markets were lower even with a strong increase in US equities. The EMI Index was lower after a strong decrease in Brazilian equities. The EMI Index decreased 0.58 percent on the day with the year to date gain at 0.9 percent. Six of the ten bourses in the Index are still in positive territory for 2018 with China still holding the worst performing spot in the Index with Hong Kong in the top spot with a 4.5 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 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.