Return to Blog

Morning Energy Blog – June 24, 2015

Equities and the Economy

Good morning and happy National Pralines Day. Stocks rallied nicely in Europe but it was a choppy session here in the U.S. with the major indexes inching higher. The Dow closed 24 points up at 18,144, the S&P 500 added a single digit ending at 2,124 and the Nasdaq climbed 6 points to 5,160. Of note, the Nasdaq, as well as the Russell 2000, ended at record highs for the second consecutive day. The S&P has a record closing high in its sight being only 0.3% from its high. Optimism about a Greek solution has supported the market the last couple of days but locally there’s been positive economic data helping U.S. markets. Yesterday I mentioned the NAR report on Monday showed used home sales were great climbing to the highest level since 2009. This was followed up by a report yesterday showing new home sales increased in May to their highest level in 7 years beating economists’ forecasts.

Returning to Greece, divisions remain between the two parties over details of the agreement, specifically the amount of tax increases vs. spending cuts, and somewhat weighing on the markets this morning with Germany’s and France’s stock market slightly lower and pulling the Dow down 26 points. I do not envy Greece’s Prime Minister Alexis Tsipras. His job is hard enough having to negotiate with the IMF, ECB, the European Commission and the Germans, specifically Angela Merkel, but he must also deal with his left-wing, anti-austerity Syriza party. His party isn’t a traditional party but a coalition of left–wing groups with an intricate family tree formed out of doctrinal splinters and squabbles. It is those many, disparate factions that Mr. Tsipras must satisfy with any potential bailout agreement. That unusual composition has made it especially hard for Tsipras to strike a deal. When he goes to sell the deal to his party and Greece he will be under attack from the both the Left and the Right. The Left will feast on him if the deal passes because it will definitely come with austerity. The Right will chastise him if the deal fails and a Grexit occurs bringing with it economic shock and pain. He has become Hamlet. Incapable of making a decision until it is far too late and until his political death is imminent.

Oil

WTI gained 63¢ yesterday settling at $61.01 which is a two week high. Brent popped $1.11 closing at $64.45. Oil prices rose on the announcement from Defense Secretary Ash Carter yesterday while he was in Estonia stating the U.S. will spread about 250 tanks, armored vehicles and other military equipment across six former Soviet bloc nations including the aforementioned Estonia, Bulgaria, Latvia, Lithuania, Poland and Romania. Take that Mr. Putin! The defense chiefs standing with Mr. Carter all spoke bluntly about the threat they perceive from Russia with these latest military plans providing a show of solidarity across the region and NATO. This most definitely has to make ole Vladimir uncomfortable. Think about it this way. How would you feel if Russia deployed tanks just across our border with Canada?!

WTI is up another 31¢ this morning triggered by API’s report after the bell last night showing a steep 3.2 million barrel draw in U.S. crude inventories last week. Additionally, yesterday Iranian leader Ayatollah Ali Khamenei ruled out putting a halt to the nation’s nuclear program before the June 30th deadline which decreases the potential of Iran adding 1 million bpd to global supply.

Blog weather 6-24-15
WEATHER BOTTOM STRIP
Courtesy of MDA Information Systems LLC

Natural Gas

Natural gas did nothing yesterday with the July contract losing 0.7¢ settling at $2.726. The trench warfare continues the bulls seeing record demand by the electric generation sector and production flat to marginally down and the bears pointing the forecast which is showing normal to below temperatures in the eastern half of the nation. By the way, the extended forecast just came out this morning which is for the July – August time frame and it is bearish showing below normal temperatures in the entire Mid-continent region of country for both months. And then we’re into September.

This morning natty is chopping around being up 1.2¢.

Elsewhere

A milestone in the corporate world happened yesterday. Facebook is now bigger than Wal-Mart, at least based upon market capitalization. The former is valued at $242.7 billion and the latter $233.8 billion. Facebook knocked the world’s largest retailer out of the top 10 ten list of the highest-valued companies in the S&P 500 index. I hope you own Facebook. The stock is up a whopping 32% in the past 12 months. Friend me?

Disclaimer: Although the information contained herein is from sources believed to be reliable, TFS Energy Solutions, LLC and/or any of its members, affiliates, and subsidiaries (collectively “TFS”) makes no warranty or representation that such information is correct and is not responsible for errors, omissions or misstatements of any kind. All information is provided “AS IS” and on an “AS AVAILABLE” basis and TFS disclaims all express and implied warranties related to such information and does not guarantee the accuracy, timeliness, completeness, performance or fitness for a particular purpose of any of the information. The information contained herein, including any pricing, is for informational purposes only, can be changed at any time, should be independently evaluated, and is not a binding offer to provide electricity, natural gas and related services. The parties agree that TFS’s sole function with respect to any transaction is the introduction of the parties and that each party is responsible for evaluating the merits of the transaction and credit worthiness of the other. TFS assumes no responsibility for the performance of any transaction or the financial condition of any party. TFS accepts no liability for any direct, indirect or other consequential loss arising out of any use of the information contained herein or any inaccuracy, error or omission in any of its content. This document is the property of, and is proprietary to, TFS Energy Solutions, LLC and/or any of its members, affiliates, and subsidiaries (collectively “TFS”) and is identified as “Confidential.” Those parties to whom it is distributed shall exercise the same degree of custody and care afforded their own such information. TFS makes no claims concerning the validity of the information provided herein and will not be held liable for any use of this information. The information provided herein may be displayed and printed for your internal use only and may not reproduced, retransmitted, distributed, disseminated, sold, published, broadcast or circulated to anyone without the express written consent of TFS.