Market Report & Analysis for 7/27/2018 Morning Edition

Morning Market Overview

Oil prices have been moving higher for the last six out of seven trading sessions. The short-term low in the spot WTI contract was hit on July 17. Since then the market sentiment has shifted back to being more concerned that the pledged increase in supply may not completely offset all the evolving geopolitical events around the world. On Wednesday the market was further supported by a much larger than expected draw in US crude oil stocks to the lowest level since February 2015. Total combined stocks of crude oil and refined products also declined strongly on the week (more detail this afternoon).

On the geopolitical front, the situation in Venezuela is getting far worse as the IMF is forecasting surging inflation which will continue to dampen any return to normalcy in this economically batted country. If the economy continues to deteriorate Venezuela will be unable to mitigate the ongoing decline in their crude oil production which is now down to the lowest level in years. On the financial front, global equity markets were mixed.

The EMI Index was higher for five of the ten bourses in the Index. The EMI Index increased by 0.63 percent on the day with the year to date gain at 1.6 percent. Five 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 4.6 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 lower on the day with the Yen/USD and the Euro/USD higher. Overall the currency markets were a positive price driver for the oil complex.