Thursday, September 18, 2014

Thursday -- September 18, 2014; Natural Gas Fill Rate At 90; First Time Unemployment Claims Plummet; Housing Starts Plummet

We've since dropped back to 199, but this was the first thing I saw this morning when checking rig counts:

Active rigs:

Active Rigs200180194199146

This is not an investment site. Do not make any investment decisions based on anything you read here or anything you think you might have read here. Yesterday I mentioned that if the Fed announced that is would not raise interest rates through 2016, that could mean 200 points on the Dow. Yesterday, just after the announcement that the Fed won't raise rates "for a considerable time," the Dow was up 80 points (and then dropped back to close up 25 points and a new all-time high); today it's up about 90 points. 170 points is not all that far off from 200. Just saying. LOL.


RBN Energy: Goldilocks and the three winters -- how natural gas storage recovered from the vortex.
From a high of $6.14/MMBtu in February 2014 natural gas prices have fallen to $4.013/MMBtu yesterday (September 17, 2014). In large part the price decline reflects the recovery of gas storage levels from record lows in March at the end of a freezing winter. Booming production and a milder summer have provided the surplus supplies needed for injections to replenish inventories reasonably close to normal levels (the latest storage numbers are released by the Energy Information Administration (EIA) this morning (September 18, 2014). Today we describe the impact of supply and weather driven demand on storage levels.
So, what was the fill rate this past week: 90.  RBN Energy says things are on track; not to worry. That suggests RBN Energy looks for an "80 - 90" fill rate. For round numbers, I suggested a fill rate of at least 100 was needed, so a drop to 90 (from the previous week of 92) was not particularly reassuring. But the market seems satisfied: natural gas is down about 3 cents to just under $4.00.


Jobs and Housing Starts

It's hard for me to reconcile these to data points. First time claims for unemployment benefits plunged by 38,000 while new housing starts plunged more than 14% in August. On jobs and housing, Bloomberg is reporting:
The number of Americans filing applications for unemployment benefits plunged last week to a two-month low, a sign the labor market continues to strengthen.
Jobless claims decreased by 36,000 to 280,000 in the period ended Sept. 13, the Labor Department said today in Washington. The median forecast of 52 economists surveyed by Bloomberg called for a decline to 305,000. Those already collecting unemployment benefits fell to a more than seven-year low. 
obless claims last week were the lowest since 279,000 in mid-July and the second-lowest since 2000. Estimates in the Bloomberg survey ranged from 290,000 to 320,000. The prior week’s claims were revised from an initial reading of 315,000.
Another report today showed beginning home construction slumped 14.4 percent in August, the most since April 2013, indicating the recovery in housing remains uneven.
Housing starts dropped to a 956,000 annualized rate, according to the Commerce Department. Building permits were also down last month
With a number that plunged that much, of course one expects the four-week moving average to have also dropped and it did:
The four-week average of initial claims, a less-volatile measure than the weekly figure, decreased to 299,500 from 304,250 the week before. 
When I see that analysts expected a decline to 305,000, but instead the number plunged to 280,000, all I can say is: it is what it is. The market will react appropriately.

But when I see new housing starts in August plummet more than 14%, ....

I can't reconcile the unemployment claims and new housing data. It doesn't sound like Bloomberg can either, except to say "the recovery in housing remains uneven." Well, yes.

Any early news coming out of Scotland? Not yet.

Another journalist captured by ISIL. Another videotaped beheading in the offing, no doubt. Pun intended.

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