Equities and the Economy:

• Dow and S&P eke out another record high.
• Maybe time for a breather.

Yesterday’s gains in stocks were very small but they were enough to take the Dow and S&P 500 to new record highs. The Dow rose 39 points to 22,158 and the S&P gained 2 to 2,498. The Nasdaq added 6 points to close at 6,460. We’ve had a very nice run higher of late and are due for a breather. Stocks are fully valued currently and earnings are going to have to catch up to prices. I wouldn’t be surprised if we move sideways, or even pullback marginally, until we get into the next earnings season.

The only economic report of significance was the Labor Department’s report on producer prices stating its index rose 0.2% in August driven by higher gasoline costs. Core PPI, which excludes the more volatile fuel and food prices, also rose 0.2% for the month and is up 1.9% for 12 months. Neither one of these data points is anything to get excited about. The closely watched inflation report is due today.

This morning the U.S. markets are quiet with the Dow down 4 points. Like a massive army moving forward needing to reestablish supply lines, stocks need to bivouac.

Oil

• Oil prices leap.
• DOE report bullish.

The DOE released its regular weekly crude and products report which showed U.S. crude oil stocks rose less than expected and gasoline and distillate inventories feel more than forecast. Harvey shuttered refining capacity which means crude inventories would rise, however, they rose 5.9 million barrels, less than expectations of 10.1 million barrels. Additionally, gasoline stockpiles fell 8.4 million barrels with traders looking for a 4 million barrel decline. Last week’s drop in gasoline inventories was the largest in history. Distillates, which is mostly diesel, also fell more than forecasts declining 3.2 million barrels, well above the forecast of a 300,000 barrel withdraw. That data alone was enough to bring the bulls in, but they got even more excited upon reading the Paris based IEA’s monthly report stating the global oil market is starting to tighten due to robust demand in the Northern Hemisphere and a drop in OPEC and “friends” production.

With all that feed it was Pamplona yesterday with WTI shooting up $1.07 closing at $49.30 and Brent rising $89¢ settling at $55.16. Yesterday was WTI’s highest closing price since August 9th and Brent’s highest finish since mid-April.

The EIA also reported the U.S. refineries ran at 77.7% capacity last week, the lowest in 9 years. Harvey.

This morning the bulls remain in control with WTI up 60¢ trading only 10¢ less than $50/bbl.

Courtesy of MDA Information Systems LLC

Natural Gas

• Weather forecast and storage levels supporting prices.
• Prices up 7% this week.

Harvey and Irma pushed natural gas prices lower last week on their demand killing affect, but with the storms passing the weather forecasts have been supportive of prices pushing prices up 7% this week. Yesterday the October contract closed up 5.70¢ at $3.058. Additionally, the bears have not wanted to push the market lower knowing that storage levels are below last year. Speaking of storage, today is Thursday and that means its EIA storage report day. The market is looking for a 85 Bcf injection. This compares to last year at this time when we had a 58 Bcf injection and the 5 year average is a 63 Bcf injection. The expected higher injection number is due to Harvey’s effect of reducing natural gas demand for A/C load.

It looks like the bulls have their positions on for now because natty is down 1.5¢. Next week the eastern half of the U.S. is going to see some much-above average temperatures. Definitely price supportive, but remember, a lot of this is built into the current price. It’s called a “future” for a reason amigo.

Elsewhere

10 Interesting Facts about America:

• 27% of Americans believe we never landed on the moon.

• The American flag’s official colors are “Old Glory Red,” “White”, and “Old Glory Blue.”

• The seven rays on the crown of the Statue of Liberty represent the seven continents.

• Montana has three times as many cows as people.

• Even though the grizzly bear is California’s official state animal, none have been seen there since 1922.

• Although English is the most commonly spoken language in the United States, no official language exists.

• In addition to its mainland, Louisiana consist of 2,482 islands that cover nearly 1.3 million acres.

• US Highway 550 in Colorado became known as the Million Dollar Highway because its roadbed was paved with low-grade gold ore.

• Although Ohio is listed as the 17th state in the U.S., it technically is the 47th because Congress forgot to vote on a resolution to admit it into the Union until 1953.

• The Venus Fly Trap can only be found natively in the Carolinas and nowhere else in the world.