This is a classic example of "Overall Market Risk". When the DOW is down almost 600 points and the S&P 500 Index is down 70 points, it is difficult for even our profitable Sweet stocks to move higher. Large funds are forced to sell some of the best stocks on days like this. FANG was up a few cents this morning, but now it is down slightly.
Four stocks in the High Yield Income Portfolio are up slightly: BSM, VNOM, HMENF (100% weighted to oil) and PAGP. BSM being up is a bit weird since it is the most heavily weighted to natural gas of the four minerals companies.
Today's selloff is just Fear of The Fed.
Barron's
Worst CPI Day for Stocks Since 2022
By Connor Smith
Stocks were on track for their worst consumer-price index release day since 2022 after the January inflation reading came in hotter than expected.
The Dow Jones Industrial Average was down 434 points, or 1.1%, on pace for its worst CPI release day since Sept. 13, 2022, when it fell 3.9%, according to Dow Jones Market Data.
The S&P 500 was down 1%, which would be its worst post-CPI reaction since it fell 4.3% on Sept. 13, 2022. The Nasdaq Composite was down 1.2%, its worst CPI release day since that same day, when it fell 5.2%.
The Russell 2000 was down 2.6%, on pace for, also its worst post CPI release day since September 2022, when it fell 3.9%.
Consumer prices rose 3.1% year over year in January, compared to expectations at 2.9%. While the hotter-than-expected report has pushed back expectations for rate cuts, it's nowhere near the torrid 8.3% annual pace that prompted the Sept. 13, 2022, slide.
WTI is up over $1.00/bbl, so why are stock prices down?
WTI is up over $1.00/bbl, so why are stock prices down?
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: WTI is up over $1.00/bbl, so why are stock prices down?
This 10 day weather forecast here: https://weather.com/maps/tendayforecast actually looks bullish for natural gas demand, but the Long Paper Traders cannot find enough physical gas buyers to bail them out of their MAR24 HH gas contracts. Why?
You'd think that the big physical buyers of natural gas (utilities and big industrial users) would be taking advantage of the situation; buy cheap gas now and sell it next winter at much higher prices. However, if they are willing to buy the gas and put it into storage, they have to come up with a lot of cash. Today's high interest rates + storage fees make it expensive to hold large inventories. This sounds counter-intuitive, but once we get passed the winter heating season, I expect natural gas prices to drift higher. The utilities that deliver gas to homes and businesses during the winter are actually required by law to have enough ngas in storage to make it through a cold winter. Refilling storage is not an option; it has to be done each year.
It will also help ngas prices if several of the big gas producers announce plans to decrease their drilling programs. Even if they have drilling contracts that they cannot get out of, I recommend that they don't complete the wells to avoid the high completion costs and the risk of selling shale gas from HZ wells that come on at high rates and then decline rapidly.
Back to the weather. If Joe Bastardi's weather forecast (normal winter weather hangs around passed mid-March) ends up being accurate, I think the end of heating season ngas storage level ends up being ~1,850 Bcf (compared to 2,584 Bcf on February 2). That sounds like a lot of gas, but it would only be ~200 Bcf over the 5-year and well within the 5-year range.
You'd think that the big physical buyers of natural gas (utilities and big industrial users) would be taking advantage of the situation; buy cheap gas now and sell it next winter at much higher prices. However, if they are willing to buy the gas and put it into storage, they have to come up with a lot of cash. Today's high interest rates + storage fees make it expensive to hold large inventories. This sounds counter-intuitive, but once we get passed the winter heating season, I expect natural gas prices to drift higher. The utilities that deliver gas to homes and businesses during the winter are actually required by law to have enough ngas in storage to make it through a cold winter. Refilling storage is not an option; it has to be done each year.
It will also help ngas prices if several of the big gas producers announce plans to decrease their drilling programs. Even if they have drilling contracts that they cannot get out of, I recommend that they don't complete the wells to avoid the high completion costs and the risk of selling shale gas from HZ wells that come on at high rates and then decline rapidly.
Back to the weather. If Joe Bastardi's weather forecast (normal winter weather hangs around passed mid-March) ends up being accurate, I think the end of heating season ngas storage level ends up being ~1,850 Bcf (compared to 2,584 Bcf on February 2). That sounds like a lot of gas, but it would only be ~200 Bcf over the 5-year and well within the 5-year range.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: WTI is up over $1.00/bbl, so why are stock prices down?
The U.S. Dollar Index is up 0.70% today, which normally puts downward pressure on WTI prices.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group