Morning Market Overview
Oil prices were hit with a strong round of selling Thursday after the IEA released their monthly oil forecast (see this afternoon for the highlights) indicating that despite a tightening of supply global economic risks were mounting which could have a negative impact on global oil demand.
The IEA report finished this week’s round of fundamental projections (EIA and OPEC earlier) all of which had a bearish overtone. The oil complex has been slowly moving higher in a wide trading range as major concerns still exist over strong supply tightening as new sanctions are expected to be implemented on Iran by the US in early November.
In fact, exports from Iran has already declined as companies start to throttle back supply commitments in anticipation of the sanctions. Today was a down day but the overall trend is still biased to the upside based on the evolving geopolitical risks slightly offsetting the demand slowing scenario. 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 0.23 percent on the day with the year to loss at 2.3 percent. Four 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 the US in the top spot with a 5.8 percent gain for the year. The negative 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 mixed. Overall the currency markets were a positive.