Crude oil prices were hit with another round of selling after the IEA joined OPEC and the EIA in publishing a bearish forecast. The International Energy Agency (IEA) cut its forecast for global oil demand while projecting a stable supply outlook. Overall the IEA report is now forecasting a surplus well into 2017, which is in sharp contrast to their previous month’s forecast which projected a more balanced global situation.
The American Petroleum Institute (API) weekly oil inventory snapshot was slightly supportive for crude oil as it showed a smaller than expected build in crude stocks. That said the market remains mostly focused on the bearish forecasts heading into the opening of the Asian trading session. Tomorrow’s EIA weekly inventory report will get close scrutiny and could be a market mover especially if it is in sync with the API data just released.
Currently the spot WTI and Brent crude oil contracts seems to be heading toward their respective technical trading range lows. If most of the news remains biased to the bearish side the aforementioned contracts are likely to test the lows from the first of the month and if breached could result in an even deeper slide heading into the informal OPEC/non-OPEC meeting in Algeria in a few weeks.
On the financial front, equity markets were hit with a strong round of selling with most bourses ending their trading sessions in negative territory for the day. On Tuesday equity markets in the U.S. trading session ended strongly lower as did eight of the 10 bourses in the Index. The overall EMI Global Equity Index decreased by 1.51% with the year to date gain narrowing to 9.3% and well below the all-time high for 2016. Five of the 10 bourses in the Index are still in positive territory for 2016. China remains in the worst performer spot in the Index with Brazil remaining on top with a 31.1% gain for the year. The strongly negative direction for global equity markets was a negative price driver for the oil complex today.