Equities and the Economy:

• Dow and S&P flat over the last 5 days.
• Nasdaq coming back “in line.”

The last Morning Energy Blog was last Thursday reflecting Wednesday’s price action so let’s see what’s happened since then. For the Dow and S&P 500, nothing. Both are very, very marginally lower compared to last Wednesday’s close. I’m calling it “flat” with the Dow closing yesterday at 21, 479 and the S&P 500 ending at 2,429. However, the Nasdaq has lost some ground falling 124 points, 2%, over the period finishing Monday at 6,110. That being said, the Nasdaq was/is due for a pullback. The Dow and S&P are up about 8% for the first half of 2017 while the Nasdaq was up as much as 16% which was almost exactly a month ago. That’s too much folks. As the say on the slopes, the Nasdaq got “over its skis.”

There were no overseas major economic reports released overnight and with it being a holiday here in the States yesterday liquidly was thin globally and the major foreign indexes were, and are, little changed with the Dow up 2 points this morning.

The major news is North Korea’s successful ICBM launch yesterday. This means it can hit Alaska.

Oil

• Oil prices higher.
• IEA forecasts global balance in second half of 2017.

Oil prices have climbed somewhat since last Wednesday. On that day WTI closed at $44.74 and Brent settled at $47.31. On Monday WTI finished at $47.07 and Brent ended at $49.68. Doing simple math, WTI has gained $2.33, or 5.2%, and Brent $2.37, 5.0%, over the period. For you with longer term memories, you’ll recall I mentioned that oil was oversold down at the $42.00ish level and a bounce was due. That bounce has taken place over the last 9 days, and now may be over. Barring an unexpected shocking bullish report prices are going to find it difficult to get back to $50.

The bulls may hang their hat on comments from the IEA’s (not our EIA) Executive Director, Mr. Fatih Birol, who stated yesterday the agency expects the global oil market to rebalance in the second half of 2017. He did add the caveat that if output from Libya and Nigeria continues to increase that “may change the picture.” I’m taking Mr. Birol and the IEA’s comments with a big grain of salt. The agency for the past several years has said the market would rebalance, only to be surprised by the continued imbalance.

This morning WTI is down 45¢.

Courtesy of MDA Information Systems LLC

Natural Gas

• Prices down since last Wednesday.
• Still trading around $3.00

Last Wednesday the August Nymex contract closed at $3.042. On Monday it settled at $2.951. Therefore, prices have fallen 9.1¢, 3.0%, over the past 3 trading sessions. That being said, at the 10,000 ft. level we’re still trading broadly around $3.00.

After being flat for the first 5 months of this year production is rebounding. Through May U.S. dry production averaged about 70.5 Bcf/d. Over this past holiday weekend production hit a 2017 high of 72.4 Bcf/d which is slightly over 2016’s average of 72.2 Bcf/d. The increase is primarily due to higher output in the Northeast which hit a new record of 24.8 Bcf/d. U.S. production averaged 72.4 Bcf/d through the first 5 days of this month, higher than the previous single day record through the rest of the year.

The new production data is weighing on natty just a tad with it being down 3.7¢ as I write.

Elsewhere

Beginning 4 days ago you may see your credit score improve. Effective July 1st the three major credit agencies, Equifax, Experian and TransUnion, will begin excluding most civil judgements and about half of all tax lien data from credit reports. This change will impact about 7% of people with FICO scores, about 15 million of the 220 million Americans with scores. Public records like bankruptcies, tax liens and civil judgments typically stay on credit reports for 7 years, so those who see these items removed get a long-lasting weight removed from their credit scores. People who this effects will probably see their score increase 20 points or less because 92% of those same people have other negative information on their credit files. That being said, the boost in score may be enough for a person to now qualify for a loan. In addition to the public record data, the plan also prohibits the agencies from including medical debts on credit reports until after 180 days to allow insurance payments to go through.

The three credit scoring agencies are making the change as a result of a 2015 settlement with 31 state attorneys general who were investigating the agencies over the accuracy of credit reports.