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Phil Flynn

Phil Flynn is writer of The Energy Report, a daily market commentary discussing oil, the Middle East, American government, economics, and their effects on the world's energies markets, as well as other commodity markets. Contact Mr. Flynn at (888) 264-5665

[Daniel J. Graeber, UPI]

Expectations of a build in oil and gasoline inventories and broad-based stock market concerns sent the price of oil into negative territory early Tuesday.

Crude oil prices followed major stock indices lower on Monday in what wound up being one of the worst selloffs on the Dow. Markets in Asia followed U.S. markets, with Japan’s Nikkei index closing down about 4.7 percent. London’s FTSE is trending lower before the close and most futures point to another down day on Wall Street.

Phil Flynn, the senior market analyst for the PRICE Futures Group in Chicago, said it’s unclear if the reversal is a market correction, or a sign of broader issues driven by inflationary fears.

“Of course, when you’re driven by fear and algorithms it’s hard to find stability,” he said in a daily commentary. “Oil is being driven down by fear and not reality as demand so far is exceptional.”

The price for Brent crude oil was down 1.24 percent as of 9:20 a.m. EST to $66.78 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 1.2 percent to $63.38 per barrel.

The price for oil will likely be determined late in the trading morning when the U.S. Energy Information Administration releases an annual market report. EIA reported total U.S. crude oil production passed 10 million barrels per day and an early read of the report Tuesday said to expect rising production and relatively flat consumption.

Meanwhile, commodity pricing group S&P Global Platts said it expects data to show crude oil stocks in the United States increased 2.8 million barrels and gasoline rose 200,000 barrels.

On inflationary pressures, the Organization for Economic Cooperation and Development reported net inflation for the world’s industrialized economy slowed 0.1 percent from November to 2.3 percent.

“Excluding food and energy, inflation increased slightly to 1.9 percent, compared with 1.8 percent in November,” the OECD stated.

Elsewhere, British energy company BP said it turned in one of its strongest performances to date in the fourth quarter. The company’s full-year profit of $6.2 billion was more than double the previous year and full-year production was the highest since 2010.

Speaking ahead of fourth quarter earnings, meanwhile, Total Chairman CEO Patrick Pouyanné told French newspaper Le Monde there were no guarantees that the price of oil will stay at its relatively high level.

“There are still many unknowns on the oil markets,” he said.

https://www.upi.com/Fear-factor-drives-the-price-of-oil-lower/1541517926982/?nll=1

Questions? Ask Phil Flynn today at 312-264-4364         A Subsidiary of Price Holdings, Inc. – a Diversified Financial Services Firm. Member NIBA, NFA Past results are not necessarily indicative of future results. Investing in futures can involve substantial risk of loss & is not suitable for everyone. Trading foreign exchange also involves a high degree of risk. The leverage created by trading on margin can work against you as well as for you, and losses can exceed your entire investment. Before opening an account and trading, you should seek advice from your advisors as appropriate to ensure that you understand the risks and can withstand the losses. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or futures. The Price Futures Group, its officers, directors, employees, and brokers may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction. Reproduction and/or distribution of any portion of this report are strictly prohibited without the written permission of the author. Trading in futures contracts, options on futures contracts, and forward contracts is not suitable for all investors and involves substantial risks. ©2018
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