Morning Energy Blog – February 25, 2016

Equities and the Economy

Today’s Blog will be shorter than normal because I had a meeting this morning which is delaying the Blog. U.S. equities closed marginally higher yesterday with the Dow up 53 points to 16,485, the S&P 500 closing 9 at 1,929 and the Nasdaq up 39 to 4,542. That isn’t much, but I liked the price action. The Dow was down more than 250 points intraday and rebounded nicely. And guess what, oil was down early in the morning and closed marginally higher. You don’t know it but it looks like you’re an oil trader! Whether you like it or not! The correlation between equities and oil is over 90% right now! This morning oil prices are down marginally and equities are trading pretty flat to yesterday’s close. Note I mentioned the price action of oil before mentioning what equities are doing!

Regarding economic news, The Commerce department reported that sales of new homes fell 9.2% in January to an annual rate of 494,000, which was way below estimates of 520,000. The decline was largely due to a stunning 32% drop in sales in the West.

Oil

Oil prices were down over a dollar, 4%, in the morning but clawed back and when the closing bell rang WTI was up 28¢ at $32.15 and Brent rallied materially closing $1.14 higher at $34.41. The rebound began after the EIA released its weekly crude and products report noting that although crude inventories rose, they rose much less than forecasts. Expectations were for a rise of 6.5 million barrels with the actual 3.5 million. The aggregate number (crude, gasoline and distillates) was an decrease of 0.4 million barrels with expectations of an increase of 2.5 million barrels. This morning WTI is down 62¢.

Courtesy of MDA Information Systems LLC

Natural Gas

Natural gas prices did nothing yesterday closing down 0.4¢ at the ridiculously low price of $1.778. Prices have dropped nearly 45¢ in a little more than 3 weeks. There are two events of significance today. First, the EIA releases its weekly storage report. Expectations are for a 142 Bcf withdrawal. The other is the March Nymex contract expires. So much fun! This morning natty is down 4.2¢