Equities and the Economy:

• S&P posts biggest one-day gain in 2 months.
• Nasdaq has best 1 day-gain in 8 months.

It’s been a very, very fickle month for stocks. Why do I say this? Because the S&P 500 has had its 3 biggest daily gains and its 2 worst daily losses of the year all in the month of June. Yesterday was one of the former. The S&P 500 climbed a hefty 21 points, 0.9%, to end at 2,441, its largest daily gain since April 24th. The Nasdaq rose 88 points, 1.4%, to 6,234 recording its biggest one-day gain since November 7th. While not falling into the “largest daily gain” category the Dow also has a great day yesterday closing up a very nice 144 points, 0.7%, at 21,455. For the record, the closes of these indexes are not at record highs, but we’ll always take “up” days over “down” days. The impetus for the buying yesterday was news that the Fed has approved plans from the 34 largest U.S. banks to use extra capital for stock buybacks and dividends, all of which drive stock prices higher, and investors wanted a piece of that. Couple that with the knowledge we’re still in a bull market and no one wants to get left behind, especially professional money managers who are measured vs. major and sector indexes.

The only major report yesterday was from the National Association of Realtors stating its index of pending home sales fell 0.8%. At first blush this appears disappointing but it’s the lack of inventory which is causing sales to fall. Listings are down 8.4% on an annualized basis. Evidence of the demand is that the median sales price rose 5.8% from the same 12 month period a year ago to $252,800.

This morning it’s choppy out there with the Dow up 20 and the Nasdaq down 23.

Oil

• Prices post 5th consecutive higher close.
• EIA reported U.S. production fell last week.

The EIA released its weekly crude and products report yesterday noting crude inventories rose last week by 120,000 barrels with the market expecting a hefty draw of 2.5 million barrels. This bearish data point was offset by the gasoline inventory data where supplies fell by 900,000 barrels compared to forecasts of a drop of 580,000 barrels. But here was the big take-away from the report. The agency stated that U.S. production fell by 100,000 bpd last week to 9.25 million bpd. This coupled with a falling U.S. dollar (the greenback is at its lowest level against a basket of foreign currencies since last October) and you get a supported market. A point of caution here. We need to see whether or not the drop in production was the result of Tropical Storm Cindy. For the day WTI closed up 50¢ at $44.74 and Brent settled 66¢ higher at $47.31.

This morning oil continues to grind higher being up 27¢.

Courtesy of MDA Information Systems LLC

Natural Gas

• July Nymex contract expires.
• Storage report out this morning.

Yesterday was the last day of existence for the July 2017 Nymex contract. It expired up an even 3¢ at $3.067 which will set the price of July gas supply cost for many folks. Also for those on an unhedged heat rate product, yesterday’s settle set their July electricity rate. The contract’s expiration price was up more than 25¢, 9%, from last week’s 3 month low. The low came last Monday on a bearish weather forecast while each subsequent forecast has been marginally warmer to where above normal temperatures are forecast for the 6-15 day time frame. Layer on the longer term July and August forecast of above normal temps and you’re going to find way more buyers than sellers.

Today the EIA releases its weekly storage report with traders looking for an injection of 52 Bcf. Note this is below the 5 year average of 72 Bcf.

This morning the August contract spends its first day as the prompt, or front, month. It’s moribund being down 0.8¢

Elsewhere

Have you heard about The Freeze? I’m not talking about the Tastee one. I’m talking the Atlanta Braves Freeze. The Freeze is the latest sensation and is now receiving national media attention. It all started as a promotion by RaceTrac, an Atlanta based gas station/quick mart company, looking to advertise their new line of frozen drinks. It’s now gone viral. It goes like this. Between innings The Freeze races a fan on the warning track between the foul poles, which is about 500 feet. If the fan wins, he (it’s always been a male) wins $500. The Freeze” is 26 year old Nigel Talton who was an Olympic contender and runs the 40 yard dash in a blazing fast 4.28 seconds. To make it more fair, The Freeze gives the fan a 25 yard head start. Making it all the more humorous, The Freeze wears a blueberry stretch suit that looks like it’s out of the Incredible’s movie with goggles the size of a VR headset. Usually it takes The Freeze most of the way around the field to catch the fan so there’s a long moment where the audience knows that The Freeze is clearly faster than the poor bloke, but does the fan have enough of a lead to hold off the charge?

Up until a couple of weeks ago The Freeze was a local phenomenon. That was until one over confident fan started celebrating an apparent victory just a little too bit early. As the fan was waving to the crowd about to cross the finish line he took a big ole header, and The Freeze blew past him. It was 28-3 all over again, and The Freeze had run down that virtual unicorn. The video – the drama, the humiliation, the sheer speed – blew the event into orbit and now everyone who comes into the stadium asks, “When is The Freeze going to run?”

On a logistical note, the next Morning Energy Blog until Wednesday July 5th. Taking a little R&R.