Today we have Existing Home Sales at 9:00 A.M. and API Energy Stocks at 3:30 p.m. Yesterday’s Crop Progress Report showed the harvest was near completion but rains in portions of the country put a snag in the overall picture. Rains in the Eastern Corn Belt and the Southeast slowed farmers with wet conditions. In the overnight electronic session the December Corn is currently trading in a quiet trading range with the last price at 343 ½ which is 1 ½ of a cent lower. The trading range has been 344 ¼ to 343 ½. Next week’s Crop Progress Report should be the final act of this year’s growing season.
On the Ethanol Front the December contract posted a trade at 1.406 which is .008 of a cent higher. 1 contract traded and Open Interest has declined to 942 contracts. The market is currently showing 2 bids @ 1.383 and 2 offers @ 1.404.
On the Crude Oil front the market sold off Sunday night after Germany really gave a no confidence to Angela Merkel as she seems to have lost her coalition with her refugee policy, this sent the U.S. dollar soaring as investors overreacted and were looking for a safe haven which also pummeled the Gold and the Stock Market sold off only to recover later in the day trading session. In the overnight electronic session the January Crude Oil is currently trading at 5648 which is 6 tics higher. The trading range has been 5688 to 5632. This afternoon’s API Energy Stocks has whisper numbers of another big draw and talks of OPEC extending production cuts could really set this market in balance.
On the Natural Gas front the market is quiet even with cold temperatures on the way and were trading a little easier for the moment. In the overnight electronic session the December Natural Gas is currently trading at 3.037 which is 1 cent lower. The trading range has been 3.044 to 3.014.
— Daniel Flynn
The Energy Report: Legging up
It looks like oil is consolidating for another leg up as it shakes off political uncertainty in Germany, one of the reasons we pulled back yesterday, and instead on talk of another big drop in supply in the Cushing Oklahoma. Market chatter has the NYMEX delivery point falling at least 1 million barrels and some say the drop could be more than 2 million barrels. Last week the Energy Information Administration (EIA) reported that Cushing’s crude oil inventories fell by 1,504 barrels. The Cushing draws will continue as U.S. refiners are in a mad rush to keep up with distillate demand as supplies are the tightest we have seen in years and are well below the five-year average.
That will keep oil that is unquestionably in a bull market rising as refiner demand will keep a bid on all grades of crude. Brent Crude which is in the high $62 a barrel handle will also be bid as European Refiners are looking to keep running and seasonal North Sea production issues are just up ahead. With a U.S. tax cut bill looking more likely like a done deal, at some point will only add to the projected demand for oil.
I told Liz Claman on the Closing Bell on Fox Business Network that a tax cut bill over time might double the stock market over a period and would be wildly bullish for economic growth. While that might sound optimistic there is historical basis to it. Now Goldman Sachs co-chief markets economist Charles Himmelberg is predicting that 2018 will be another year of strong growth for the worldwide economy. He and his team expect the global economy to grow 4 per cent next year in which there will be growth surprises to the upside.
4% growth for the U.S. economy means oil well above $60 a barrel as demand will outstrip the shale oil producer’s ability to keep up with the growth. Oil bears are changing their tune as they are getting squeezed out by record longs. Predictions of surging U.S. production is falling short and the expected extension of OPEC production cuts will continue to drain global supply. Hedgers need to be hedged if they are not all ready as the risks pf upside price spikes are growing.
The Keystone Pipeline finally won approval but TransCanada is not jumping for joy. While approving the Nebraska commission offered a new route that will likely be fought again in court. !0 year and counting for approval!
My Buddy’s at GasBuddy have put out the, over the river and through the woods, retail gasoline outlook. GasBuddy, projects that Thanksgiving will see the highest average gas prices since 2014 as the country prepares for the busiest traveling weekend of the year. Yet the average gas price in four of five U.S. states is lower than a week ago, coming as the number of Americans driving is expected to surge by 20 percent over last Thanksgiving, according to GasBuddy’s Annual Holiday Travel Survey.
GasBuddy projects the national average gas price this Thanksgiving will be $2.53 per gallon, the priciest Thanksgiving in three years (2014: $2.79), though not as high as the peak on Thanksgiving in 2012 ($3.44). Additionally, average gas prices have risen 9 cents in the last month, the largest pre-Thanksgiving Day increase since 2007, when average prices rose 26 cents in the 30 days leading up to the holiday. “This year has been unique at the pumps. Gas prices spent much of the time in the weeks approaching Thanksgiving by rising when typically, they would be on a sizeable downward trend,” said Patrick DeHaan, head of petroleum analysis at GasBuddy. “On average Americans are paying nearly 40 cents a gallon more than last year, which means collectively we’re spending $800 million more on fuel over the Thanksgiving travel period. Drivers should pay close attention to prices to avoid overpaying.”
According to GasBuddy’s Annual Holiday Travel Survey, despite higher gas prices, travelers are driving longer distances. 2017 is expected to see a 4 percent increase in travelers driving for 10 or more hours over Thanksgiving compared to 2016.
— Phil Flynn
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