Market Report & Analysis for 7/30/2018 Morning Edition

Morning Market Overview

Oil prices were higher across the board Thursday but off the intraday highs hit early in the trading session. The two-main upside price catalysts were an agreement between the EU and the US on trade avoiding a prolonged trade war along with the Iranian proxy Houti’s attacks on Saudi Arabian oil ship going through the strait of Bab al-Mandeb in the Red Sea. This happened twice and has caused Saudi Arabia to at least temporarily suspend shipments through the straits.

Recall last weekend Iran said they would block the flow of oil from the Middle East if the US goes through with its sanctions in November. This is the Iranians trying to demonstrate that they can have an impact on the flow from the region. We would almost be certain that there will be some statements coming from the US in the not too distant future. The tensions are rising and the geopolitical risk on oil supply is also rising. 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 decreased by 0.23 percent on the day with the year to date gain at 1.4 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 4.5 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 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.