Market Report & Analysis for 8/17/2018 Morning Edition

Morning Market Overview

The bearish market sentiment continued Wednesday with another round of strong selling with the main catalyst a bearish weekly EIA inventory snapshot. When the dust settled crude oil prices declined around $2/bbl after a much larger than expected build in crude oil stocks, the first build in Cushing crude oil inventories after 12 weeks of declines with total combined US stock of crude oil and refined products increasing strongly on the week (see below for a detailed inventory analysis).

Both US crude oil and total combined stocks of crude oil and refined products are now above the five-year average with total combined stocks now 48.6 million barrels above the low hit in Feb of this year. The market sentiment is bearish as the view that the increase in production will offset the potential further loss of production of the various evolving geopolitical events around the world garnered support from the bearish inventory snapshot.

On the financial front global equity markets were mostly lower.

The EMI Index was lower for nine of the ten bourses in the Index. The EMI Index decreased by 1.32 percent on the day with the year to date loss at 1.5 percent. Three 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 5.8 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 lower. Overall the currency markets were a positive price driver for the oil complex.