Market Report & Analysis for 9/21/2018 Morning Edition

Morning Market Overview

Oil prices moved strongly higher Wednesday after a slightly bullish overall weekly EIA inventory snapshot. The EIA reported total combined stocks of crude oil and refined products declined by 0.4 million barrels compared to a huge build in the previous week.

Total stocks are now 123.6 million bbls below the hit in early 2017 but 55 .3 million bbls above the low hit early this year. The consistent and strong destocking trend appears to be over for now as total stocks have been slowly rising since early 2017. Despite the mildly supportive fundamental snapshot the market still embraced the data points with crude oil increasing over 1 percent on the session.

In addition, both the financial and commodity markets (including oil) have mostly ignored and discounted the installation of a new round of tariffs between the US and China. It does not look like there will be a resolution anytime soon and as such a prolonged tariff environment could result in a slowing of both the US and Chinese economies and thus oil demand.

On the financial front global equity markets were mostly higher for the second day I a row in a post tariff expansion world. The EMI Index was higher for eight of the ten bourses in the Index. The EMI Index increased by 0.27 percent on the day with the year to gain at 0.2 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 the US in the top spot with a 6.9 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.