Equities and the Economy:

• Another muted day on Friday.
• Major indexes post marginal gains for the week.

The U.S. equities market treaded water the last two days of last week. On Friday the Dow fell 20 points to 20,915, the S&P 500 lost 3 ending at 2,378 and the Nasdaq closed flat to Thursday at 5,901. It was a descent week with the Dow, S&P and Nasdaq up 0.2%, 0.1% and 1.9%, respectively. For the year your 401K is in good shape with the Dow up 5.8%, the S&P up 6.2% and the Nasdaq up a whopping 9.6%.

Regarding important economic data, the University of Michigan released its closely monitored consumer sentiment report on Friday noting its index from March rose to 97.6 from February’s 96.3. The significance here is that this is the highest this index has been in 13 years! The rise in the index is primarily due to improved personal finances. Digging below the headline deep partisanship exists. Among Democrats the Expectations Index at 55.3 signaled a deep recession was imminent while among Republicans the Index at 122.4 indicated a new era or robust grow. It’s either Armageddon or euphoria.

On March 29th U.K. Prime Minister Theresa May will trigger the beginning of the country’s process of leaving the European Union. The technical term is “triggering Article 50” of the Lisbon treaty which says “Any member state may decide to withdraw from the union in accordance with its own constitutional requirements.”  The wording of the article is vague, almost as if the drafters thought it would never come into play.

This morning it’s more consolidation with the Dow chattering around. It was down 18 points earlier and is up 27 currently.

Oil

• Oil prices unchanged on Friday.
• Prices post first weekly gain in three weeks.

Oil prices closed little changed on Friday with WTI closing up 3¢ at $48.47 and Brent finishing up 2¢ at $51.76. Chatter. For the week oil posted its first weekly gain in three with WTI up 0.6% and Brent up 0.8%. The surprising API and EIA reports in the middle of the week showing a drop in inventories supported the market. You regular readers may recall that I mentioned a couple of weeks ago that per the CFTC speculative longs were at a record high. Not no more. Per the latest CFTC data last Friday, WTI longs are now at their lowest level since 2016. The data showed the sharpest week-on-week fall in net length since 2006. In every market a heavily listing boat always rights itself.

Baker Hughes released its rig count report as usual on Friday, and it is truly amazing how the U.S. oil and gas producer adapts. In spite of a relatively low price of $50 per barrel oil the rig count continues to increase. Last week E&P companies added a hefty 21 rigs: 14 oil, 6 natural gas and one miscellaneous (not sure what “miscellaneous” is!). What’s very interesting is that it wasn’t the Permian, the most favored basin for weeks, where the rig count rose for the Permian lost a rig. The increase was in the Oklahoma, 10, in the SCOOPS and STACK, and in North Dakota, 5. The increase in North Dakota, specifically the Williston basin, is especially significant to me because the Williston is in the Bakken which is one of the most expensive basins to drill and has some of the worst netback pricing to producers, i.e., lowest well head price. The oil rig count is now up 140% from its low 10 months ago. All I can say is “Wow!” By the way, it’s not just here in the U.S. where the producer is becoming more efficient and productive. The rig count in Canada is up 280% from this time last year.

This morning Texas Tea is on the defensive being down 43¢.

Courtesy of MDA Information Systems LLC

Natural Gas

• Prices rally into the weekend on lingering cold.
• Spring coming next week to the Midwest and East.

On the lingering cold and short covering natural gas prices ended the week on an up note with the April contract closing up 4.6¢ at $2.948. The calendar strips were little changed. Although technically spring arrived today at 6:28 AM EDT, you folks in the Midwest and east are going to have to wait until this weekend to feel it for temperatures this week will remain below normal this week which is spurring some buying this morning in the cash market which is boosting prices 6.1¢ today. Don’t forget that although we’re going into the natural gas “shoulder season” there’s going to be an above normal amount of nuke plants going down for maintenance which will boost natural gas load and support prices.

Elsewhere

Kalel Langford of Centerton, Arkansas was in the southern portion of his home state at a baseball tournament for 14 year olds and got to fulfill his lifelong dream of visiting Arkansas’ Crater of Diamond State Park. Kalel and his parents arrived at the park on the afternoon of Saturday March 11th. By the end of the day he had registered the 7th largest diamond found at the park since 1972! Kalel was walking near the East Drain in the southern portion of the park’s diamond search area when he spotted a shiny dark, brown item located a few inches from a stream of water with a bunch of other rocks the same size. He picked it up and called his father over to look at it. The color was so dark they weren’t sure it was a diamond. The family stopped by the Diamond Discovery Center to have the find identified before leaving the park and, sure enough, Kalel’s find was a diamond, and one of the largest in the park’s history! Being Kalel found it on state property does he get to keep it? Yep. The park advertises it’s “The world’s only ‘keep what you find’ diamond site.” Kalel named the diamond Superman after his comic book hero. Kalel is also Superman’s birth name. Bet you didn’t know that.