Market Report & Analysis for 9/26/2018 Morning Edition

Morning Market Overview

Oil prices surged higher Monday after OPEC failed to come up with a recommendation on Sunday to increase production in light of Iranian production starting to decline. The spot Brent contract is now trading solidly over the $80/bbl level with WTI still a long way from that level.

The Nov Brent/WTI spread surged today as market participants expect more of an impact on Brent and international crudes priced against Brent. Market participants are once again setting up for another possible upside leg to the recovery rally that has been in place for an extended period. With little over a month to go before the US is scheduled to add a new, stringent round of sanctions on Iran the market is becoming more and more concerned that the physical oil markets will tighten.

There are still some variables out there that could offset another strong move to the upside… release of oil from the SPR, OPEC members increasing production quietly and even a resolution between Iran and the US. On the financial front global equity markets were mostly lower after rising for the previous four trading sessions as evolving trade issues were front and center once again.

The EMI Index was lower for eight of the ten bourses in the Index. The EMI Index decreased by 0.98 percent on the day with the year to gain at 0.7 percent. Six 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 7.5 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 mixed. Overall the currency markets were a negative for the oil complex.