Return to Blog

Morning Energy Blog – March 3, 2016

Equities and the Economy

U.S. stocks closed marginally higher yesterday, but in my opinion it was quite a positive performance. The reasoning is after coming off a huge up day on Tuesday stocks didn’t pull back, even after trading slightly in the red for most of the day. That’s called good price action. For the record the numbers were the Dow closed up 34 at 16,899, the S&P 500 gained 8 to 1,986 and the Nasdaq added 13 to 4,703.

There was some very important economic data released yesterday. First, the ADP Research Institute reported that private sector employers added 214,000 new jobs in February which was strong being 22-27,000 more jobs than economists were forecasting. This is a very important report because its viewed by investors as an insight into the bid daddy report tomorrow which is the Labor Department’s Employment Situation Report. Separately, the FOMC has its meeting next week and the Federal Reserve Bank always releases its Beige Book at this time. The Book addresses economic conditions in all 12 Federal Reserve districts. Overall, and despite the problems in the energy sector, the Book’s view is that the U.S. economy is moving ahead, not stagnating, and should continue to do so sufficiently to allow a round or two of interest rate hikes. Speaking of which, and due to recent data showing inflation increasing towards the Fed’s 2% target, the market is pricing in a 40% chance of an interest rate hike in June. This is pretty amazing considering that probability was next to nothing a few weeks ago.

This morning is beginning like yesterday with Dow futures down 14 points. Asian markets closed mixed and the European markets are marginally lower. Bottom line is that right now the other major global markets are taking their cues off the U.S. market.


Oil prices crept higher yesterday with WTI closing 26¢ higher settling at $34.66 and Brent up 12¢ to $36.93. The DOE reported that U.S. crude stockpiles increased by a whopping 10.4 million barrels to a record 518 million barrels The increase was more than triple estimates. Gasoline inventories were 1.5 million barrels lower which was about 1.0 million more than estimates. In aggregate, stockpiles increased a huge 11.8 million barrels with estimates at 2.5 million barrels. And not only did the price of oil not fall, it closed marginally higher. Now maybe it’s because Vladimir Putin stated yesterday that Russia’s major producers have agreed to freeze output at January levels, but this is a little weird because Russian output in February was near a record high. Maybe it was because Venezuela’s Oil Minister Del Pino said more than 25 countries will attend an upcoming oil meeting to discuss an output freeze. I don’t know but when you have a super bearish DOE report and prices don’t go down your antennae better be up!

This morning WTI is down 17¢. Chatter.

Blog Weather 3-3-16
Courtesy of MDA Information Systems LLC

Natural Gas

Natural gas prices dropped back into the 60’s with the April contract closing down 6.4¢ at $1.678. Front month natural gas prices have dropped nearly 85¢ (33%) from their 2016 high at $2.495 to levels not seen since the late 1990’s. Weather forecasts after the next couple of days of normal to below normal temperatures are turning very warm which will kill any heating load and being we’re in early March, there is no A/C load, so it’s no load conditions over the next couple of weeks.

The EIA releases its weekly natural gas storage report today and the market is expecting a withdrawal of 42 Bcf. This morning natty is flat to yesterday’s close.


Ever wonder why airplane windows are round. When you think about it, it’s kind of strange. Just about every other window we see is rectangle. In fact, square windows were all the rage in early airplane design. After all, square windows were ubiquitous and why change a model that’s worked in homes and cars for generations? In the 1950’s commercial jetliners rose to prominence and became capable of flying higher and faster, and that’s when bad things started happening. In 1953 three planes broke apart in midair causing tragic crashes that killed 43 people. The cause, square windows. The sharp corners of the square windows were natural weak spots for stress concentrations which were weakened further by air pressure. Curved windows, which have no focal point, distribute the stress reducing the likelihood of cracks or breaks. Circular shapes are also stronger and resist deformation and can thus survive the extreme differences in pressure between the inside and outside of the aircraft.

The next time you gaze out your window to the world at 35,000 feet I bet you notice that the window is round!

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.