Equities and the Economy:

• All three major stock indexes close at record highs on Friday.
• Post solid gains for the week.

Although trading mostly lower most of the day, the three major bourses eked out gains on Friday setting new record highs. The Dow closed up 4 points at 20,624 and the S&P 500 also added 4 points to 2,351. The Nasdaq had a good day rising 24 points, 0.4%, ending at 5,839. It was a solid week for equities with the Dow, S&P and Nasdaq rising 1.7%, 1.5% and 1.8%, respectively. There wasn’t any significant economic reports both Friday and the holiday yesterday so let’s move on to today. Asian markets closed mostly higher led by Japan’s Nikkei. Japanese data released while you slept revealed manufacturing activity expanded in February at its quickest pace in nearly three years. The positive news is pushing European stocks higher this morning and with this being a bull market the momentum is being felt in U.S. stocks with the Dow up 91.

Oil

• Oil prices close unchanged on Friday.
• The “mix” to determine the Brent price is changing.

Oil prices closed little changed on Friday with WTI closing up a meaningless 4¢ at $53.40 and Brent finishing up 16¢ at $55.81. Baker Hughes released its rig count report on Friday showing the count continues to climb. The company reported an increase of 6 oil and 4 gas rigs from the previous week. There are now 597 oil rigs working in the U.S. That is up 281 rigs from the nadir back in May 2016. That’s 89%! Natural gas rigs are at 153 which compares to the low of 87 back in May 2016. That’s up 76%.

BMI Research reported today that crude exports from the U.S. reached a record high in the week ending February 10th with most of the volume directed to Asia. This is the result of OPEC cuts

The mix to determine the Brent oil posting, the world’s benchmark, will change on January 1st. Platts, the company that does the posting, stated that due to falling output from the current four North Sea oil fields it will add a 5th North Sea oil field, the Statoil Troll field, to the mix to determine the price. Shell just announced that due to falling production it is applying to decommission the Brent oil field that the benchmark gains its namesake.

This morning oil is running with WTI up a hefty 95¢, a 7 week high. The slippery stuff is getting a boost on statements by Russia’s energy minister that the country will implement its full production cut by the end of April.

Courtesy of MDA Information Systems, LLC

Natural Gas

• Natural gas prices close slightly lower on Friday.
• This morning prices plunging.

Last Friday the March contract finished 2.0¢ lower at $2.834 which is chatter but let’s move on to this morning for that’s where the action is. As I mentioned last week, temperatures this past weekend in the Midwest and the east were 20 degrees above normal killing load and this morning the cash market is feeling it. Chicago is expected to hit a high of 68 today, 30 degrees above normal!, and the extremely weak cash market is pulling down the futures with it. The March contract is trading down 22.3¢ as I write. Look at the weather map. There’s no normal temps in the two week forecast let alone cold weather. That forecast takes us into March where HDD’s rapidly decline. Current prices are down $1.25, 32%, from their high in December. That being said, prices are still solid for the summer with July and August near $3.00

Elsewhere

A couple of weeks ago Mark Charles Bennett, 48, of Scala, Florida was arrested for an alleged plot to set off homemade explosives in several East Coast Target stores. He was caught when the person he offered $10,000 to put at least ten explosives, disguised as food items, on the shelves of the stores went to the authorities and turned him in. The ten devices were hidden in emptied out containers of stuffing mix, breakfast bars and pasta. So what was his motivation? Had Target did him wrong in his view and he wanted vengeance? Was this a random act or terrorism? Nope. You’ll never guess. He wanted to plant and explode the explosives on the theory Target’s stock price would fall allowing him to buy shares cheap before the price eventually rebounded! I’ve heard of insider trading but this takes the cake!