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Morning Energy Blog – December 6, 2016

Equities and the Economy:

• Dow hits another record.
• Institute of Supply Management Nonmanufacturing Index Grew at Fastest Pace In A Year.

The Dow hit an intraday high yesterday climbing to 19,275 before backing off and closing up 23 points at 19,193. While not posting highs the S&P 500 and Nasdaq both closed up with the former ending 9 points higher at 2,201 and the latter advancing 44 points to 5,300. Helping equities was the Institute of Supply Management’s service sector report noting its index for that segment of the economy rose to 57.2 in November from 54.8 in October not only coming in above expectations but marking the fastest growth for this sector in a year.

This morning things are pretty quiet with the Dow down a few points and the Nasdaq up a few. Chatter.

Oil

• After gains for multiple days oil prices end little changed.
• WTI closes up 11¢ at $51.79.

Yesterday WTI gained 11¢ to $51.79 and Brent added 48¢ to $54.94. Since the OPEC agreement was struck last Wednesday WTI prices have risen 16% and Brent has gained 19%. It makes sense that Brent would rise more than WTI because OPEC is primarily “Brent” in nature. After four sessions of gains and the highest prices in more than a year profit taking is coming in with WTI down 99¢.

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Courtesy of MDA Information Systems LLC

Natural Gas

• Natural gas prices scream higher closing up 21.8¢ at $3.654.
• Prices are at levels not seen in two years.

With cold weather coming and the forecast turning colder morning natural gas prices went ballistic yesterday with the January Nymex contract closing up a huge 21.8¢ at $3.654. This is the highest level since December 2014.The calendar strips were also up strong. After a historically warm autumn recent forecasts have shown below-normal temperatures causing prices to surge nearly 40% since November 11th.

The U.S. has officially become a net exporter of gas. With a 7.4 Bcf/d export volume and an import volume of 7.0 Bcf/d last month the U.S. became a net exporter of natural gas for the first time in 60 years. Exports to Mexico have risen materially the last couple of years and are now exporting about 4 Bcf/d and with Cheniere having brought on its second LNG train it’s consumption averaged 1 Bcf/d last month helping to set the record. Additionally, Canadian imports were down. Both exports to Mexico and LNG exports will continue to grow over the next couple of years.

This morning it’s moribund with natty up 2.2¢.

Elsewhere

Most history buffs know Thomas Jefferson loved everything about the French, but they don’t know how much he embraced casual dress, extremely casual. It was not inordinate for President Jefferson to greet his White House guests in his robe and slippers! And while Jefferson didn’t adopt the bisou, he was the person who initiated the custom of shaking hands when meeting people. Previously, and as George Washington did, bowing was favored when greeting.

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