Dow dropped 118, decliners over advancers 2-1 & NAZ fell 100. The MLP index retreated 4+ to 151 &.the REIT index lost 1+ to the 385s. Junk bond funds were mixed & Treasuries rose in price. Oil dropped below yesterday's high of 61 & gold crawled up 1 to 1773 after dropping for 4 consecutive sessions (more on both below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Frigid temperatures knocked out electricity across Texas & resulted in one of the largest US oil production disruptions ever. Shut-ins related to the winter storm have removed about 3M barrels of daily oil production, or 27% of US output, much of which comes from the oil-rich Permian Basin located in West Texas & Eastern New Mexico. Refining capabilities in Houston have also been knocked offline. “It really is a perfect storm,” said Stephen Schork, founder and editor of the daily oil subscription newsletter The Schork Report. “We've had hurricanes, but this is an all-encompassing storm, the likes of which the North American or the U.S. refinery and oil market has never seen before.” The US produced about 11M barrels per day in Jan, according to the Energy Information Administration. Daily production had topped out 13M barrels in early 2020 before the COVID-19 pandemic. Typically, with a hurricane, producers & refiners are given a week's notice & have plenty of time to shut in their operations. But this arctic storm took the area by surprise, resulting in a “disorganized shut-in of these facilities,” Schork added. Producers and refiners hope the disruptions won’t last for too long & Mother Nature appears to be on their side. More snow & freezing temperatures are expected in the Permian Basin before climbing into the mid-50s this weekend, according to the National Weather Service. Temperatures in Houston, meanwhile, are forecast to reach the mid-30s today & possibly hit 70 degrees by next week. The warmer temperatures are expected to thaw the power generators that have been knocked offline & in turn, help restore production. "As power is restored to the oil patch and temperatures rise in the Permian Basin, oil production will slowly be restored to normal levels over the next week," Texas Railroad Commissioner Wayne Christian said.
Texas storms cause epic drop in U.S. oil production
Gold futures settled higher to score their first gain in 5 sessions after settling a day earlier at the lowest since Jun & as a bearish pattern materialized in the commodity's price chart. Prices for the yellow metal for Apr climbed $2 to settle at $1775 an ounce, after bullion fell 1.5% yesterday & marked its lowest settlement since around Jun. Yesterday the most-active gold futures contract also registered its first “death cross” since Jun 2018, with the 50-day moving average at $1856 & the 200-day moving average at $1857. A death cross occurs when the 50-day moving average crosses below the 200-DMA, which is widely viewed as a dividing line between longer-term uptrends & downtrends. Commodity dealers were also digesting the latest US economic reports. Weekly jobless claims rose in mid-Feb to a 4-week high of 861K, underscoring that Americans are still losing their jobs nearly a year after the onset of the coronavirus pandemic. New-home construction fell to a seasonally-adjusted annual rate of 1.58M in Jan, down 6% from the previous month's revised figure, while the Philadelphia Federal Reserve’s gauge of regional business activity moderated in Feb, to 23.1 from 26.5 in the prior month.
Gold prices notch first gain in 5 sessions after ‘death cross’ pattern emerges
The House aims to pass its $1.9T coronavirus relief plan before the end of Feb as Dems race to beat a deadline to extend key unemployment programs, Speaker Nancy Pelosi said. She told reporters she hopes for a vote “sometime at the end of next week.” House leaders will stay in touch with the Senate about what Congress can include in the aid package under budget reconciliation, which enables Dems to approve the plan without Rep votes, Pelosi added. The party aims to speed up Covid-19 vaccinations & buoy jobless Americans as the US approaches a year of fighting the health crisis. Some Reps have backed a smaller bill based around vaccine distribution money, but Dems wielding control of Congress & the White House say they risk a tepid response that leads to more financial pain. Ms of Americans could lose jobless benefits if lawmakers fail to act in the coming weeks. A $300 per week federal unemployment supplement & provisions expanding eligibility for insurance will expire on Mar 14. The Dem plan would increase the enhanced payment to $400 per week thru Aug 29 & would extend the pandemic-era jobless programs, which offer benefits to self-employed & gig workers & increase the number of weeks Americans can receive payments, thru the same date. The legislation would also send $1400 direct payments to most Americans & up to $3600 per child to households over a year. It would put $20B into a national vaccination program, $350B into state, local & tribal aid & $170B into K-12 schools & colleges for reopening & student aid costs. Reps have criticized the bill's overall cost & raised concerns about the amount of money going into stimulus checks & schools. The House bill includes a plan to raise the federal minimum wage to $15 per hour by 2025. The Senate parliamentarian will decide whether the proposal complies with rules governing budget bills.
House aims to vote on Covid relief bill by the end of next week, Pelosi says
Oil futures ended lower, pressured by speculation that major oil producers may discuss an increase in production when they meet early next month. The possibility of extra supply outweighed support from a 4th straight weekly decline in US inventories & ongoing weather-related energy output & refinery disruptions in Texas. A report said that Saudi Arabia plans to announce a reversal of its unilateral output cuts when OPEC+ meets next month. Oil exports from Iraq, meanwhile, climbed in the first ½ of Feb, even after the OPEC member pledged to cut production this month. West Texas Intermediate crude for Mar fell 623 (1%) to settle at $60.52 a barrel after touching highs above $62 during the session. Apr Brent crude, the global benchmark, lost 41¢ (0.6%) at $63.93 a barrel. Traders also weighed the impact of the snow storms & freezing weather in Texas on energy production & demand. Texas faced a 4th day of electricity blackouts that is estimated to have also shut in around 40% of US crude output, while also closing a number of refineries. Around 4M barrels a day of US output has been knocked offline as a result of the storms that have hit the state. Oil found support early today after data from the Energy Information Administration revealed US crude inventories declined by 7.3M barrels last week, marking a 4th weekly decline in a row.
Oil prices end lower on talk of potential OPEC+ output increase
Buyers returned for later trading. They liked the economic data & were encouraged by talk of voting on an economic relief bill. However the goings on in DC are always difficult to understand before legislation is voted on. Hopefully the terrible weather in much of the country will end shortly. Meanwhile the popular stock averages remain in record territory.
Dow Jones Industrials
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