Market Report & Analysis for 7/19/2018 Morning Edition

by | Jul 18, 2018 | EMI, Fuels & Markets, Industry News

Morning Market Overview

After Monday’s strong loss in value in the oil complex the market stabilized in a light round of short covering ahead of the start of the weekly inventory report cycle.

Once the API report was issued prices moved lower once again after a surprise build in US crude oil stocks against an expectation for large draw. Since the sell-off from last Wednesday the oil complex is now in a short-term downtrend. The spot Brent contract is now trading in below the level it was at when OPEC announced they were increasing production on June 22. The geopolitical loss of production anticipation rally is now over as the increase in the production side of the equation seems to be currently winning the battle in the trading community.

The API started the weekly inventory report cycle with an across the board build with the main surprise coming from a small build in crude oil versus an expectation for another large draw. There was also a surprise build in gasoline stocks with a slightly larger than expected build in distillate fuel inventories. Total combined inventories of crude oil and products were higher on the week. Overall the market gave back most of the pre- inventory trading gains once the report was issued. On the financial front global equity markets were mixed. The level of uncertainty remains at an elevated level. The EMI Index was higher for seven of the ten bourses in the Index.

The EMI Index increased by 0.68 percent on the day with the year to date gain at 0.1 percent. Five of the ten bourses in the Index are now 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 positive value direction in global equity markets was a positive 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.