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Morning Energy Blog – December 30, 2016

Equities and the Economy:

• U.S. equities close flat on low volume.
• All three indexes on track to post solid gains for December.

U.S. stocks closed marginally lower yesterday with the Dow off 14 points to 19,820, the S&P 500 ending down a single digit at 2,249 and Nasdaq ending 6 points lower at 5,432. Trading volume was roughly half of the 30 day average. Bottom line, a nothing day with many investors and traders not even in the office. Expect more of the same today. Looks like Dow 20,000 won’t happen in 2016.

The only economic report yesterday was weekly jobless claims that came in as expected at 265,000 and remain at historically low levels. Initial jobless claims have now been under 300,000 for 95 consecutive weeks, the longest streak since 1970. If Donald Trump implements a plan to increase fiscal, i.e. infrastructure, spending we may actually face a labor shortage in 2017 which would drive up wages, consumption and inflation. I’m sure the Fed has its antennae raised.

2016 will go down in history as truly a remarkable year, not just politically but also financially. The S&P 500 began 2016 with its worst start ever in history and is now poised to end up almost 10%.

This morning the Dow is up 34 points.

Oil

• WTI closes down 29¢ at $53.77 breaking four days of gains.
• EIA weekly report showed larger than expected build in crude inventories offset by big draw down of gasoline and products.

WTI fell 29¢ yesterday settling at $53.77 and Brent lost 8¢ closing at $56.14. Chatter. The EIA released its weekly crude and products report and while crude stocks rose more than expected, 614,000 barrels, this was more than offset by a big drop in gasoline and product inventories, 3.5 million barrel. The report was somewhat bullish but like equities, many traders are on vacation. Additionally, oil prices pushed to an 18 month high this month and a little consolidation is in order. This morning WTI is leaking trading down 25¢.

weather-12-30-2016
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Courtesy of MDA Information Systems LLC

Natural Gas

• February natural gas drops 9.6¢ to $3.802.
• EIA reports a hefty 237 Bcf withdrawal from storage.

The February Nymex contract spent its first day as the prompt month falling 9.6¢ closing at $3.802 in spite of a bullish storage report. The EIA in its weekly storage report stated a big 237 Bcf was withdrawn from storage last week which was greater than the market was looking for which was 232 Bcf. Despite that natty prices fell. Prices had gotten pretty darn frothy almost hitting $4.00 with the January contract’s expiration and buyers weren’t anxious to get long above that price. Last week was when temperatures were well below normal as averaged across the country and heaters were running continually. Putting the withdrawal in perspective, last year for the same week a paltry 50 Bcf was withdrawn and the 5 year average is only 80 Bcf. Inventory levels are not 11% below last year and 2.3% below the five year average.

Like the other markets natty is quiet this morning down 3.3¢.

Elsewhere

New Year’s Eve is one of few events celebrated by almost all countries. The theme is hope for a more prosperous and happy next year. Here are some fun facts and trivia associated with the celebration.

• The first New Year was celebrated 4,000 years ago by the Babylonians.
• Using a baby to signify the new Year began in ancient Greece around 600 B.C.
• It’s tradition to ring in the New Year with family and friends because the first people you see will either give you good luck or bad luck.
• The top three places to celebrate New Year’s Eve in the U.S. are Las Vegas, Disney World and, of course, New York. Internationally, one of the biggest celebrations is in Sydney, Australia. More than 80,000 fireworks are set off from Sydney Harbor Bridge.
• The first Time Square New Year’s Eve ball was dropped in 1907 after a new fireworks banned was instituted. Back then, a 700 lb. ball embellished with 25 watt bulbs made of iron and wood was dropped. Today’s ball weighs 11,875 lbs., is 12 feet in diameter and is adorned with 2,668 Waterford crystals.
• In Italy people wear red underwear on New Year’s Day to bring good luck all year long.
• It’s good luck to eat black eyed peas, ham and cabbage because it is thought they bring prosperity. Stay away from lobster or chicken. Lobsters can move backwards and chickens scratch in reverse with the implication being a reversal of fortune.
• The traditional New Year’s song, “Auld Lang Syne” means “times gone by.”

I wish you a very happy New Year! May it be filled with happiness, good health and prosperity. Remember, the most valuable commodity is not gold, platinum or rare earths, but time. Spend it with your loved ones.

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