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May 29th – Morning Energy Report

Good morning. U.S. equities ended a choppy session on the down side yesterday with the S&P 500 off 2 points to 1,910, the Dow down 42 to 16,633 and the Nasdaq 12 lower to 4,225. I’ll take that kind of pull back after four consecutive up days. The S&P retreated from record levels but it is noteworthy it is still above 1,900. There wasn’t any major economic news released yesterday so investors turned their attention elsewhere and saw a few disappointing earnings and a new deal between Valeant and Allergand fell through which caused a “pause.” The bias remains upward and it seems like people are buying every dip, which are turning out to be very shallow.

The Asian markets closed mixed biased to the down side and the European markets are trading the same. Two data points were just released. First, Q1 GDP was revised to a contraction of 1.0% down from the 0.1% increase in the preliminary reading and materially lower than the 0.5% Wall Street was forecasting with the Polar Vortex being blamed. Second, the Labor Department released its weekly jobless claims showing there were 300,000 new claims which was better than the 318,000 economists’ estimated. So there’s the ying-yang. U.S. markets are taking it all in stride with the Dow up 25.

After gaining 10¢ on Tuesday the June Nymex natural gas contract rallied another 11.4¢ expiring, aka “rolled off the board,” at $4.619. I believe a combination of electric generators buying day gas keeping the cash market buoyant and fear of being short going into the summer with the associated greater CDD’s has traders playing it from the long side. Which brings me to the always important EIA natural gas storage report which comes out today it being Thursday. The market is expecting a 107 Bcf injection which compares to last year’s injection of 88 Bcf and the 5 year average of 93 Bcf. We’ll know at 9:30 CDT. Don’t touch that dial! This morning the July contract is starting off moribund being up less than a penny.

Texas tea got knackered yesterday falling a material $1.39 closing at $102.72 however Brent was unaffected by the goings-on here in the U.S. losing a much less 21¢ to $109.81. Traders were taking some chips off the table ahead of yesterday’s API report and today’s DOE report and understanding the market was a little “frothy” above $104. Last evening’s API report was very much a non-surprise for the history of the past 5 years shows that crude inventories were expected to rise a bit and product inventories to fall a bit leaving the aggregated inventory to be higher and that is precisely what we got. WTI is rebounding a bit this morning up 40¢.

Have you been hitting the gym? A lot of the world isn’t. A study by the Institute for Health, Metrics and Evaluation at the University of Washington, which was paid for by the Bill & Melinda Gates Foundation, reported that almost a third of the world is now fat and not country has been able to curb obesity rates in the last three decades. Researchers found more than 2 billion people worldwide are now overweight or obese. The highest rates were in the Middle East and North Africa where nearly 60% of the men and 65% of the women are heavy. The U.S. has about 13% of the world’s fat population, a greater percentage than any other country. There is a strong link between income and obesity for as people get richer their waistlines also tend to start bulging. I’m having a salad for lunch today. Have a good day.

 

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