Tuesday, May 10, 2016

Markets surge as commodities rise

Dow shot up 222 (closing at the high), advancers over decliners 3-1 & NAZ added 59.  The MLP index was up fractionally in the 287s & the REIT index gained a fraction in the 351s.  Junk bond funds rose & Treasuries hardly budged.  Oil went up to the 44s & gold edged higher.

AMJ (Alerian MLP Index tracking fund)

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CLM16.NYM....Light Sweet Crude Oil Futures,J....44.44 Up ...1.00 (2.3%)

Live 24 hours gold chart [Kitco Inc.]

Gap shares slumped to a more than 4-year low after fewer shoppers visiting the company's stores in the key spring season resulted in a steep decline in comparable-store sales.  The company has struggled in the past few qtrs as a series of fashion misses turned off shoppers amid increasing competition from retailers.  CEO Art Peck, had repeatedly asked for patience, promising that the company's spring season - which he dubbed the "no excuses moment" - would witness a revival in the retailer's fortunes.  Overall sales at established stores fell 5% in the qtr ended Apr 30.  Analysts had expected a decline of 2.6%.  GPS also gave a grim estimate for its Q1 profit.  GPS, like other traditional apparel chains, are grappling with a drop in mall traffic as more people shop online.  As well, a growing trend called 'fast-fashion,' stores producing cheaper versions of runway trends within weeks, has eaten into their market shares.  The stock plunged 2.51.  If you would like to learn more about GPS, click on this link:

Gap Shares Plummet on Disappointing Spring

Gap (GPS)

The US Energy Information Administration raised its 2017 estimate for US crude-oil production & forecast for West Texas Intermediate crude prices.  In its monthly energy outlook report, the gov agency forecast an average US crude output of 8.19M barrels a day for 2017, up from a prior estimate of 8.04M.  The EIA left its estimate for 2016 at 8.6M barrels a day.  WTI prices are seen at $50.65 a barrel next year, up nearly 25% from the previous estimate of $40.58.

EIA Raises U.S. Oil Output, Price Estimates For Next Year

A bad start to the year for Canadian natural gas producers is getting worse after wildfires in northern Alberta knocked out oil-sands operations that represent a key source of demand.  Spot gas prices in Western Canada have been cut by more than ½ after oil-sands developers curtailed about 40% of their supply, reducing the amount of gas used to generate power for drilling & upgrading projects. Canada's AECO spot gas fell to 53¢ US per gigajoule Mon, the lowest closing price since 1997.  Demand lost during the wildfires is another blow to drillers coping with a supply glut & competition from shale output in the US East.  Canada’s explorers had already been turning off unprofitable production after a mild winter led to record volumes in storage for the season, sending prices tumbling.  The blazes that forced the evacuation of more than 80K from the energy hub of Fort McMurray since May 3 disrupted oil-sands operations as power & pipeline supplies were cut.  Gas is used in oil-sands operations to produce the power that generates steam for drilling operations & upgraders that turn heavy bitumen into light synthetic crude.  Producers cut oil-sands volumes amounting to about 1M barrels day.  While companies are making plans to restart production, that depends on the availability of power supplies & pipelines shut during the fires.  Power flows from Alberta oil-sands cogeneration units were at 46% of the capacity, up 4.2% from a day earlier.

Canada Gas Price Plunges as Wildfires Shut Oil-Sands Output

While stocks had their best in for a couple of months, there was no special reason for this rise.  That's always alarming.  Oil had a good day, helped by the fires in Canada which have already reduced the flow of oil from this major oil exporter (mostly to the US).  Otherwise there was not a lot going on in the market.  Enjoy the higher stock prices while they last.

Dow Jones Industrials


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