Dow sank 97 (hanging in above 26K), decliners over advancers 5-2, & NAZ slid back 2. The MLP index fell 3 to the 293s. Junk bond funds were lower & Treasuries continued weak. Oil fell pennies in the 63s (more below) & gold declined 12 to 1326.
AMJ (Alerian MLP index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif?0.20941268607341113)
Temporary gov funding runs out at midnight tomorrow, & the House & Senate must pass a temporary extension to avoid a partial shutdown, but those efforts are increasingly in doubt. Dems are demanding to include a provision permanently shielding about 690K undocumented immigrants brought to the US as children from deportation. Facing a tough vote count that’s currently well short, several Senate Reps said a stopgap bill to fund the gov for just a few days is now under discussion. That would extend talks on a variety of contentious issues from budget levels to immigration into next week without partially shuttering federal operations. While far from a done deal, & one top Rep said flatly it won’t happen, the discussion is real & growing. Senator Jeff Flake said some lawmakers have been discussing a 5-day bill that would extend gov funding thru Jan 23. It's an idea being floated as a way of keeping pressure on negotiators while avoiding a partial shutdown. 2 Dem Senators also endorsed going a few extra days. The math is simple in the Senate, & it isn't good for Reps. They need Dems to help advance the measure, so at some point need to be able to count to 60. There are only 51 Reps in the Senate &, of those, at least 3 have said they won't back the bill. That means at least 12 Dems would need to back it, & currently only 1 has said he would. Senator John Cornyn, the chamber's #2 Rep, said that lawmakers won't do a stopgap lasting a few days or a week. "We’re not going to do that," he said, adding if a stopgap fails it’ll be the Dems’ fault. Still, discussions on short-term CR "may be serious" because "I don’t think there votes for a month" extension of gov spending authority, Senator Bob Corker said. But that would require the House to go along, & Doug Collins of Georgia, the vice chairman of the Rep Conference, dismissed the possibility. The House is scheduled to be out of session next week. "The Senate can do what they want,” Collins said. “I’ve heard of nothing at this point indicating a change in our plans.”
GOP Senators Weigh Short-Term Bill to Get Votes
OPEC has raised its forecast for oil supply from non-member countries in 2018 as higher prices encourage US shale drillers to pump more, offsetting an OPEC-led deal to clear a supply glut & a deepening plunge in Venezuelan production. In its monthly report, OPEC said outside producers would boost supply by 1.15M barrels per day (bpd) this year, up from 990K bpd expected previously. "Higher oil prices are bringing more supply to the market, particularly in North America and specifically tight oil," OPEC said (using another term for shale). OPEC, Russia & several other non-OPEC producers began to cut supply a year ago to get rid of a global glut of crude that had built up since 2014. They have extended the pact until the end of 2018. The OPEC forecast of higher rival supply could add to a debate about the effectiveness of keeping the curbs in place. A ministerial monitoring panel meets this weekend in Oman & is expected to discuss the eventual exit strategy from the deal. But the forecast was balanced by figures in the report showing OPEC's compliance with the supply cuts remained high in Dec & a further sharp slide in Venezuelan oil output. Oil prices edged higher after the report was released to trade above $69 a barrel & later steadied. Prices are close to the highest since Dec 2014. In a further sign excess supply is easing, OPEC said inventories in developed economies declined by 16.6M barrels in Nov to 2933B barrels, 133M above the 5-year average. OPEC's stated goal is to reduce stocks to the 5-year average. OPEC's production in Dec (based on figures it collects from secondary sources) showed overall production rising. Total output rose 42K bpd to 32.42M bpd, led by a gain in Nigeria which along with Libya was exempted from the supply cut because unrest had curbed their production. But adherence by the 11 OPEC members with output targets rose to 129%, according to estimates, higher than 121% in Nov based on last month's report. The figures that OPEC members reported themselves showed deeper declines in production. Venezuela, whose output is dropping amid an economic crisis, told OPEC its production sank by about 216K bpd to 1.621M bpd in Dec, believed to be the lowest in decades. The UAE, which lagged many of its peers on compliance last year, said it cut output by 38K bpd to below its OPEC target for the first time. The compliance improvement comes as the country prepared to assume the rotating OPEC presidency in 2018. With outside producers expected to pump more, OPEC in the report cut its estimate of global demand for its crude in 2018 by 60K bpd to 33.09M bpd. Should OPEC keep pumping at the Dec level & other things remain equal, the market could move into a deficit of about 670K bpd next year, suggesting inventories will be drawn down further. Last month's report pointed to a similar deficit of about 700K bpd.
Oil rebounded after slipping below $69 a barrel, supported by a record drawdown of US crude stockpiles at the Cushing, Oklahoma delivery hub, despite concerns that OPEC-led output cuts will increase supply from the US. Crude is just below its highest price since Dec 2014, supported by supply cuts led by OPEC concern that unrest in producer nations such as Nigeria could further curb output. US crude inventories fell 6.9M barrels last week, compared with forecasts for a 3.5M-barrel draw, the US Energy Information Administration said. Crude supplies at the Cushing, Oklahoma delivery hub for US crude futures fell 4.2M barrels in the week, the largest draw since at least 2004. After falling the previous week due to cold weather, US crude production rose to 9.75M barrels per day last week. Brent crude pared losses, but falling to $69.31, down 7¢ a barrel, after earlier slipping to $68.80 a barrel earlier in the session. On Mon it touched $70.37, the highest since Dec 2014. For its part, WTI crude settled down 2¢ at $63.95, having hit its highest also since Dec 2014 on Tues. Brent has risen from $61 a barrel in early Dec & some analysts say the rally may be about to run out of steam. The OPEC report follows a forecast from the EIA on Tues that it expects US oil output to continue to rise in Feb with production from shale increasing by 111K bpd. The agency previously said US output could reach 10M bpd in Feb & 11M bpd in late 2019. Even so, traders said prices were unlikely to fall far due to the OPEC-led curbs & the risk of further disruptions. Militant group Niger Delta Avengers threatened to attack Nigeria's oil sector in the next few days, potentially hampering supplies in Africa's largest exporter.
US crude falls 2 cents, closing at $63.95 after inventories slip
There was plenty of excitement & drama in the stock market, reflecting the chaos coming out of DC. Funding the gov has become a very big deal because those guys just care about politics. In their minds, citizens (taxpayers) come in 2nd. Any article about what somebody says is meaningless, it's just babble. A common maxim is that the stock market hates uncertainty & uncertainty is riding high going into the midnight deadline tomorrow. The long term market rally is being tested, but good economic data should allow it to withstand this storm.
Dow Jones Industrials
AMJ (Alerian MLP index tracking fund)
Temporary gov funding runs out at midnight tomorrow, & the House & Senate must pass a temporary extension to avoid a partial shutdown, but those efforts are increasingly in doubt. Dems are demanding to include a provision permanently shielding about 690K undocumented immigrants brought to the US as children from deportation. Facing a tough vote count that’s currently well short, several Senate Reps said a stopgap bill to fund the gov for just a few days is now under discussion. That would extend talks on a variety of contentious issues from budget levels to immigration into next week without partially shuttering federal operations. While far from a done deal, & one top Rep said flatly it won’t happen, the discussion is real & growing. Senator Jeff Flake said some lawmakers have been discussing a 5-day bill that would extend gov funding thru Jan 23. It's an idea being floated as a way of keeping pressure on negotiators while avoiding a partial shutdown. 2 Dem Senators also endorsed going a few extra days. The math is simple in the Senate, & it isn't good for Reps. They need Dems to help advance the measure, so at some point need to be able to count to 60. There are only 51 Reps in the Senate &, of those, at least 3 have said they won't back the bill. That means at least 12 Dems would need to back it, & currently only 1 has said he would. Senator John Cornyn, the chamber's #2 Rep, said that lawmakers won't do a stopgap lasting a few days or a week. "We’re not going to do that," he said, adding if a stopgap fails it’ll be the Dems’ fault. Still, discussions on short-term CR "may be serious" because "I don’t think there votes for a month" extension of gov spending authority, Senator Bob Corker said. But that would require the House to go along, & Doug Collins of Georgia, the vice chairman of the Rep Conference, dismissed the possibility. The House is scheduled to be out of session next week. "The Senate can do what they want,” Collins said. “I’ve heard of nothing at this point indicating a change in our plans.”
GOP Senators Weigh Short-Term Bill to Get Votes
OPEC has raised its forecast for oil supply from non-member countries in 2018 as higher prices encourage US shale drillers to pump more, offsetting an OPEC-led deal to clear a supply glut & a deepening plunge in Venezuelan production. In its monthly report, OPEC said outside producers would boost supply by 1.15M barrels per day (bpd) this year, up from 990K bpd expected previously. "Higher oil prices are bringing more supply to the market, particularly in North America and specifically tight oil," OPEC said (using another term for shale). OPEC, Russia & several other non-OPEC producers began to cut supply a year ago to get rid of a global glut of crude that had built up since 2014. They have extended the pact until the end of 2018. The OPEC forecast of higher rival supply could add to a debate about the effectiveness of keeping the curbs in place. A ministerial monitoring panel meets this weekend in Oman & is expected to discuss the eventual exit strategy from the deal. But the forecast was balanced by figures in the report showing OPEC's compliance with the supply cuts remained high in Dec & a further sharp slide in Venezuelan oil output. Oil prices edged higher after the report was released to trade above $69 a barrel & later steadied. Prices are close to the highest since Dec 2014. In a further sign excess supply is easing, OPEC said inventories in developed economies declined by 16.6M barrels in Nov to 2933B barrels, 133M above the 5-year average. OPEC's stated goal is to reduce stocks to the 5-year average. OPEC's production in Dec (based on figures it collects from secondary sources) showed overall production rising. Total output rose 42K bpd to 32.42M bpd, led by a gain in Nigeria which along with Libya was exempted from the supply cut because unrest had curbed their production. But adherence by the 11 OPEC members with output targets rose to 129%, according to estimates, higher than 121% in Nov based on last month's report. The figures that OPEC members reported themselves showed deeper declines in production. Venezuela, whose output is dropping amid an economic crisis, told OPEC its production sank by about 216K bpd to 1.621M bpd in Dec, believed to be the lowest in decades. The UAE, which lagged many of its peers on compliance last year, said it cut output by 38K bpd to below its OPEC target for the first time. The compliance improvement comes as the country prepared to assume the rotating OPEC presidency in 2018. With outside producers expected to pump more, OPEC in the report cut its estimate of global demand for its crude in 2018 by 60K bpd to 33.09M bpd. Should OPEC keep pumping at the Dec level & other things remain equal, the market could move into a deficit of about 670K bpd next year, suggesting inventories will be drawn down further. Last month's report pointed to a similar deficit of about 700K bpd.
OPEC sees more oil supply from rivals, countering its cuts and Venezuelan woes
Oil rebounded after slipping below $69 a barrel, supported by a record drawdown of US crude stockpiles at the Cushing, Oklahoma delivery hub, despite concerns that OPEC-led output cuts will increase supply from the US. Crude is just below its highest price since Dec 2014, supported by supply cuts led by OPEC concern that unrest in producer nations such as Nigeria could further curb output. US crude inventories fell 6.9M barrels last week, compared with forecasts for a 3.5M-barrel draw, the US Energy Information Administration said. Crude supplies at the Cushing, Oklahoma delivery hub for US crude futures fell 4.2M barrels in the week, the largest draw since at least 2004. After falling the previous week due to cold weather, US crude production rose to 9.75M barrels per day last week. Brent crude pared losses, but falling to $69.31, down 7¢ a barrel, after earlier slipping to $68.80 a barrel earlier in the session. On Mon it touched $70.37, the highest since Dec 2014. For its part, WTI crude settled down 2¢ at $63.95, having hit its highest also since Dec 2014 on Tues. Brent has risen from $61 a barrel in early Dec & some analysts say the rally may be about to run out of steam. The OPEC report follows a forecast from the EIA on Tues that it expects US oil output to continue to rise in Feb with production from shale increasing by 111K bpd. The agency previously said US output could reach 10M bpd in Feb & 11M bpd in late 2019. Even so, traders said prices were unlikely to fall far due to the OPEC-led curbs & the risk of further disruptions. Militant group Niger Delta Avengers threatened to attack Nigeria's oil sector in the next few days, potentially hampering supplies in Africa's largest exporter.
US crude falls 2 cents, closing at $63.95 after inventories slip
There was plenty of excitement & drama in the stock market, reflecting the chaos coming out of DC. Funding the gov has become a very big deal because those guys just care about politics. In their minds, citizens (taxpayers) come in 2nd. Any article about what somebody says is meaningless, it's just babble. A common maxim is that the stock market hates uncertainty & uncertainty is riding high going into the midnight deadline tomorrow. The long term market rally is being tested, but good economic data should allow it to withstand this storm.
Dow Jones Industrials
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