Equities and the Economy:

My apologies but this is going to be a brief Morning Energy Blog for I’ve been in meetings all morning. It was a good day for U.S. equities yesterday with the Dow closing up 85 to 18,312, the S&P 500 rising 7 to 2,167 and the Nasdaq advancing 3 points to 2,167. A positive economic report from the Commerce Department on Durable Goods helped. Whereas the headline number was a decline of 0.1% in August, orders for non-defense goods excluding aircraft, a proxy for business investment, rose a healthy 0.6% with The Street looking for a 0.2% decrease.

This morning it’s extremely quiet with the Dow down 32 and the Nasdaq down 21.

Oil

BOOM! This was where all the action was globally. Completely surprising everyone, including myself, OPEC mentioned after their 3 day meeting in Algiers that they had reached an agreement to cut production. The agreement is that OPEC and Russia will cut production from the current 33.24 million bpd to between 32.5 and 33 million bpd. It will be implemented by Russia and Saudi Arabia cutting production and Iran, Libya and Nigeria allowed to increase output. A committee will be formed to study how to carry out the cuts and will report at the next official meeting in Vienna on November 30th. Additionally supporting prices was the EIA weekly crude and products storage report. In aggregate (crude, products, gasoline) inventories declined 1.8 million barrels. Analysts were looking for a 3.8 million barrel build. The combination of the EIA report and OPEC’s announcement popped prices with WTI rising $2.38 closing at $47.05 and Brent settling up $2.7 at $48.69. Putting this in perspective, WTI is still in the mid $40’s. No one is happier than the U.S. shale producer.

Courtesy of MDA Information Systems LLC

Natural Gas

The October 2016 Nymex contract spent its last day in existence falling 4.4¢ settling at $2.952. We’ve spent 2 weeks waffling around the $3.00 level. Today the EIA released its weekly natural gas storage report. The market was looking for a 50 Bcf injection for last week. The actual number came in almost exactly at that number : 49 Bcf. I’ll expound on the report more tomorrow. The market is reacting accordingly this morning with the November contract spending its first day as the front month down .5¢. Chatter.

Elsewhere

Yogi Berra would have been 92 years old last week. His contributions to baseball are incalculable, but his legacy might even be better remembered for his quips. Most didn’t make any sense, but everyone had some truth to it. For example, “You can observe a lot by watching.”

Have a good day.