NATGAS: Natural Gas End of Day Summary: Henry Hub Lowest Since Dec. 18

Jan-03 19:28

Henry Hub is extending its earlier losses following EIA data showing a slightly below expectation stock withdrawal, heading for its lowest since Dec. 18. Forecasts for milder weather than expected is also adding pressure.

  • US Natgas FEB 25 down 8.4% at 3.35$/mmbtu
  • US Natgas MAR 25 down 6.3% at 2.95$/mmbtu
  • The EIA weekly gas inventories for the week to Dec. 27 showed a withdrawal of 116 bcf. The seasonal five-year average shows a net withdrawal of around 104 bcf.
  • Total stocks are at 3,413 bcf compared to the previous five-year average of 3,259 bcf.
  • The US total gas rig count was up 1 on the week at 103 rigs, according to Baker Hughes. This is down 15 rigs on the year.
  • The NOAA 6-14 forecast still shows below normal temperatures in the Midwest and East Coast, but above normal in the Mountain and Pacific regions. However, the colder weather is abating towards the end of that period.
  • Lower 48 natural gas demand has risen to 104.1 bcf/d today, the highest since Dec. 22 according to Bloomberg.
  • US LNG export terminal feedgas is strong at 14.71bcf/d today, a new record level according to BNEF data.   
  • US domestic natural gas production was estimated at 104.9 bcf/d yesterday, according to Bloomberg.
  • US Front Month LNG Arb remains closed as TTF prices rally Spark Commodities reports.
  • The front-month JKM-NWE spread in the LNG paper market turned negative as Europe seeks more cargoes following the Russia-Ukraine transit deal expiration, Platts said.
  • A drilling ship will arrive in Egypt this month as operator ENI looks to work on increasing output from the giant Zohr gas field.
  • Brazil’s Eneva-operated Sergipe LNG terminal has resumed operations, a source told Platts.

Historical bullets

US STOCKS: Late Equities Roundup: Eminis & Nasdaq Making New Record Highs

Dec-04 19:27
  • Stocks remain bid after a brief pull-back in the lead up to this afternoon's moderated discussion with Fed Chairman Powell. Stocks continued to make record highs in late trade: SPX Eminis tapped 6092.0, Nasdaq at 19,700.63, while the DJIA remains off late November high around 45,067.28 but still making decent gains on the day.
  • At the moment, the DJIA trades up 244.56 points (0.55%) at 44949.85, S&P E-Minis up 28.25 points (0.47%) at 6091.75, Nasdaq up 219.4 points (1.1%) at 19700.63.
  • Information Technology and Consumer Discretionary sectors continued to lead gainers in late trade, software and services shares outperforming chip stocks for a change: Salesforce Inc trades 8.81% higher after several several upgrades following late Tuesday's positive earnings call; ServiceNow +6.0% while Crowdstrike Holdings gained 4.31%.
  • Broadline retailers led the Consumer Discretionary sector with Amazon +1.97%, Best Buy +1.44%, AutoZone +0.96%.
  • Conversely, Energy and Materials sectors continued to underperformed in late trade, oil and gas shares weighing on the former as crude prices sold off in the second half (WTI -1.11 at 68.82): Texas Pacific Land -13.66%, Marathon Petroleum -3.67%, Devon Energy -3.75%.
  • Meanwhile, metals and mining shares weighed on the Materials sector: Albemarle Corp -5.98%, LyondellBasell Industries -3.48%, Nucor -3.75%.

FED: Beige Book: Softer Wage Growth, Modest Inflation (2/2)

Dec-04 19:22

Labor Market: The description of employment ("flat or up only slightly across Districts") was little changed from October's subdued description (which read "increased slightly ... with more than half of the Districts reporting slight or modest growth and the remaining Districts reporting little or no change") and about the same as September's "Employment levels were generally flat to up slightly in recent weeks. Five Districts saw slight or modest increases in overall headcounts".) Districts continued to point to low labor market turnover, and noted softening wage growth.

  • November: "Employment levels were flat or up only slightly across Districts. Hiring activity was subdued as worker turnover remained low and few firms reported increasing their headcount. The level of layoffs was also reportedly low. Contacts indicated they expected employment to remain steady or rise slightly over the next year, but many were cautious in their optimism about any pickup in hiring activity. Wage growth softened to a modest pace across most Districts, as did expectations for wage growth in coming months. Job growth and wage growth for entry-level positions and skilled trades were an exception, rising robustly and expected to grow further through next year."

Inflation: Prices were described as rising "only at a modest pace", with businesses expressing continued difficulty in passing along price increases to customers. Notably there was some concern about tariffs posing a "significant upside risk to inflation". (October's description: "Inflation continued to moderate with selling prices reportedly increasing at a slight or modest pace in most Districts."; September: "On balance, prices increased modestly in the most recent reporting period. However, three Districts reported only slight increases in selling prices.") 

  • November:  "Prices rose only at a modest pace across Federal Reserve Districts. Both consumer-oriented and business-oriented contacts reported greater difficulty passing costs on to customers. Input prices were said to be rising faster than selling prices for most businesses, resulting in declining profit margins. Although input prices rose generally, contacts in several Districts noted declines in certain raw materials and non-labor costs. In contrast, rising insurance prices were again reported widely as significant costs pressures for many businesses. Contacts indicated they expect the current pace of price growth to persist, but businesses in several Districts indicated tariffs pose a significant upside risk to inflation."

US: Trump Likely To Short Of Majority, GOP Set For Barest Margin In House

Dec-04 19:21

NPR reports that  US President-elect Trump, “got very close to a majority of the vote in this presidential election, but not quite... this year's popular-vote margin is the second-closest since 1968 and still tightening...”

  • AP: “With 96% of the vote in, Trump has 49.97% to Vice President Harris' 48.36%, or 76.9 million votes to 74.4 million.”
  • After Democrat Adam Gray defeated incumbent Republican Rep. John Duarte (R-CA) in the final House race of the cycle, the GOP will hold a 220-215 majority, which will shrink to 217-215 if Rep Elise Stefanik (R-NY) is confirmed as Trump’s UN Ambassador in January.
  • The final balance of power means that House Speaker Mike Johnson (R-LA) will effectively operate a zero-seat buffer to pass legislation until at least April, a far more fragile majority than the four-seat margin that has ground the chamber to a halt for much of this Congress. If any Republican fails to show up for a vote, the GOP will lose their majority.
  • Florida Governor Ron DeSantis (R-FL) has set special elections for April 1 to fill the seats vacated by former Rep Matt Gaetz, who failed in a bid for Trump’s Attorney General, and Mike Waltz, who will become Trump’s National Security Advisor.

Figure 1: National Popular Vote Since 2000

A graph of a number of people

Description automatically generated with medium confidence

Source: NPR