Monday, July 17, 2017

Markets mark time, awaiting earnings season

Dow fell 8, advancers over decliners about 5-4 & NAZ added 1.  The MLP index was off fractionally to the 302s & the REIT index added 1+ to the 351s.  Junk bond funds were mixed & Treasuries inched higher.  Oil drifted lower & gold rose (more on both below).

AMJ (Alerian MLP Index tracking fund)

Live 24 hours gold chart [Kitco Inc.]

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Shale crude-oil production from 7 major US oil plays is expected to climb in Aug, according to monthly report from the Energy information Administration (EIA).  Shale output is seen rising by 113K barrels a day to 5.585M barrels a day in Aug from Jul, the EIA said.  Oil output from the Permian Basin, which covers parts of western Texas & southeastern New Mexico, is expected to see the largest climb among the big shale plays, with an increase of 64K barrels a day.  Aug West Texas Intermediate oil continued to trade lower, losing 42¢ (0.9%) to $46.12 a barrel.

U.S. Shale Oil Output Expected To Rise By 113,000 Barrels a Day In August: EIA

Oil prices were little changed as output increases in some top producers eased, but investors continued to await strong indications that an OPEC-led effort to drain a glut was proving effective.  Libya's national oil production stands at 1.03M barrels per day (bpd), little changed from its level since the end of last month.  US drillers added 2 oil rigs in the week to Jul 14, bringing the total to 765.  Rig additions over the past 4 weeks averaged 5, the slowest pace of growth since Nov.  Key technical indicators are bullish, with prices rising above the short-term 50-day moving averages, traders said.  US crude traded at $46.21, down 33¢.  Prices had earlier touched their highest since Jul 5.  A sharp drop in US crude inventories in the latest week supported prices last week.  But crude stocks in industrialized nations remained high, putting a brake on the oil price rally.  While OPEC-led cuts have offered prices some support, rising supplies from Nigeria along with Libya, 2 OPEC states exempt from the pact, & increasing US production have weighed on the market.  Kuwait said on Fri the market was on a recovery track due to rising demand added it was premature to cap Nigerian & Libyan output.  An OPEC & non-OPEC committee meets in Russia on July 24 to discuss the impact of the deal.  In a sign of strong demand, data today showed refineries in China increased crude throughput in Jun to the 2nd highest on record.  OPEC is hoping higher demand in H2 will drain excess inventories.

Oil prices ease on signs of steady output from some producers

Gold climbed to settle at its highest level in more 2 weeks, as downbeat US economic data dulled prospects for further interest-rate increases by the Federal Reserve this year.  A reading today of New York-area manufacturing released showed a fall in Jul from a 2-year high.  That followed data released Fri showing a 2nd-straight monthly drop in retail sales & flat consumer prices in Jun.  Aug gold rose $6.20 (0.5%) to settle at $1233 an ounce, the highest finish since Jun 30.

Gold Settles At a More Than Two-week High

Hopes are running high for earnings season.  That's very high.  The logical problem is if there are surprises, there will be room for disappointment.   Stocks which include most REITs & junk bond funds are generally doing well.  MLP's are so-so, being held back by oil which has been stuck around 45 for months.  Production cuts have not made significant reductions in bloated inventories & global demand for oil is less than robust.  Gold has risen in the last 2 weeks, disturbing for the bullish case for stocks.

Dow Jones Industrials

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