European Central Bank Minutes Today
We got through the FED minutes and now it is time for the ECB minutes to shine. My question is, “what is the next crisis that looms?” Also on tap today after Jobless Claims fell by 16,000 to 254,000 lower than the estimate of 270,000. At 9:30 A.M. we have the EIA Gas Storage followed with the EIA Energy Stocks at 10:00 A.M. and Dairy Product Sales at 2:00 P.M. Last night’s American Petroleum Institute (API) data showed draws of 6.7 million barrels of oil, which put demand fears in the back seat for the moment. Risk on and risk off and supply seems to be the frontrunner at this stage versus demand destruction fears. In the overnight electronic session the August Crude Oil is currently trading at 4792 which is 49 cents higher. The trading range has been 4814 to 4734. If this morning’s EIA data mirrors the API data we could test $50 a barrel again real soon in this genuinely oversold market.
On the Natural Gas front I remain wildly bullish as well with the heat dome upon us and forecasted to stick around for a while we will notice air-conditioning units working overtime. The weekly Thomson Reuters poll of 16 analyst forecast injection numbers of anywhere from 35 bcf to 47 bcf with the medium 43 bcf. More bullish news to add to the recipe is the U.S. power sector on average burned 26.4 bcf of gas per day so far in 2016 which beats last year’s RECORD of 24.2 bcf at this time. Earlier estimates that were shelved over the 4th of July Holiday ranged from 38 bcf to 64 bcf/ This shows me we are not storing as much of product we are accustomed to and demand is reaching higher and higher levels only leaving me to one assumption. Higher Prices. The data forecasted is compared to an injection number of 95 bcf last year at this time and the five-year average of 77 bcf which we are well below these injection numbers. In the overnight electronic session the August contract is currently trading at 2.836 which is 5 cents higher. The trading range has been 2.839 to 2.781. This market is poised for take-off.
On the corn front we have the dead cat bounce after the market was trounced the last few trading sessions starting last week. We are definitely back to a weather market fighting the heat and how much rain the grains will see. In the overnight electronic session the September Corn is currently trading at 350 ½, which is 9 cents higher. The trading range has been 352 ½ to 341. We should build weather premium priced in this genuinely oversold market.
On the Ethanol front the August contract posted a trade at 1.590 which is .021 cents higher. The market is currently showing 4 bids @ 1.583 and 1 offer @ 1.595. I do not expect any trade at the current bid.