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Technical Update

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What’s in Today’s Report:

  • Technical Update
  • Economic Data Recap
  • EIA Analysis and Oil Update

US futures are down roughly 0.5% this morning thanks to soft earnings after the close yesterday, most notably by NVDA (the company’s shares fell nearly 20% overnight). Otherwise it was a relatively quiet night of news.

Oil is up over 1% this morning on optimism surrounding a potential OPEC-cut, but serious technical damage has been done on the charts this week, and right now, the medium term outlook is neutral at best for energy.

Economically, the only data point released overnight was Eurozone HICP which matched estimates at 2.2% y/y and is not materially affecting the euro or longer term outlook for the ECB.

Today, there is one important economic report to watch: Industrial Production (E: 0.2%) and two Fed speakers: Clarida before the open (8:30 a.m. ET) and Evans just before lunch (11:30 a.m. ET).

Otherwise, focus will be on tech shares today as if the bad earnings from NVDA weigh on the sector more broadly, then stocks will have a hard time extending yesterday’s bounce.

On the charts, yesterday’s close of 2730 in the S&P is an important level to watch as a close above would be a positive development for the near term technical outlook.

Inflation Peaking?

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What’s in Today’s Report:

  • Is Inflation Peaking Already?

Futures are flat while overseas markets were mostly lower o/n after yesterday’s huge drop in oil weighed on risk sentiment, global data was mixed, and EU political tensions continued.

Chinese FAI and Industrial Production figures for October were slightly ahead of expectations but Retail Sales notably missed which pressured Asian shares overnight.

In Europe, the German GDP flash missed which only added to ongoing angst over Brexit and the Italian budget drama in broader European markets.

Today is the busiest day of the week as far as catalysts go. First we will get the latest inflation release in the U.S. ahead of the open: CPI (E: 0.3%), then Quarles speaks shortly thereafter (9:00 a.m. ET).

There is nothing major scheduled during market hours today but focus this evening will be on CSCO earnings ($0.72) after the close and then Powell and Kaplan are speaking in Texas at 5:00 p.m. ET (with Q&A) where Powell is expected to take a more dovish tone.

Sevens Report’s Tyler Richey quoted in Wall Street Journal on November 13, 2018

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Sevens Report’s Tyler Richey quoted in Wall Street Journal on November 13, 2018. Read the full article here.

Sevens Report’s Tyler Richey quoted in Wall Street Journal on November 1, 2018

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Sevens Report’s Tyler Richey quoted in Wall Street Journal on November 1, 2018. Read the full article here.

U.S. oil drops nearly 3% – Tyler Richey’s Take on Market Watch, October 4, 2018

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U.S. oil drops nearly 3% on domestic stockpile surge, talk of efforts to raise output

“Fundamental dynamics have shifted in favor of the bears this week with a huge build in commercial crude oil stocks and news that Saudi Arabia and Russia made a private agreement weeks ago to increase output to help offset the declining exports from Iran,” said Tyler Richey, co-editor of the Sevens Report.

To read the entire Market Watch article Go here

Tyler Richey on Seeking Alpha on September 5, 2018

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Oil price drops most in three weeks as Gulf storm fears ease

“Gordon largely turned out to be a non-event for the energy market, and if anything, the sell-the-news aspect of the tropics trade has triggered a profit-taking pullback across the space,” says Tyler Richey of the Sevens Report.

Read the full article here

Gasoline and heating-oil futures – Tyler Richey on Market Watch, September 6, 2018

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“Gasoline and heating-oil futures are still in the driver seat of the energy markets, after early week rallies due to [Gulf storm] Gordon have steadily come unwound since the short trading week started on Tuesday,” Tyler Richey, co-editor of the Sevens Report, told MarketWatch.

Read the full article here

Are Commodities Bottoming?

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What’s in Today’s Report:

  • Are Commodities Bottoming?

It was another very quiet August night in the markets as US futures are flat this morning while European shares are slightly lower and Asian indexes continued to advance modestly with trade negotiations still the major focus.

The German GfK Consumer Climate edged down 0.1 to 10.5 vs. (E) 10.6 in September. Sentiment in Europe is not quite as strong as the US, but it remains mostly upbeat and strong enough for continued equity gains in the medium term.

Oil prices are slightly higher this morning despite the API reporting a slight build (+38K bbls) in crude stocks vs. (E) -1M bbls ahead of the weekly EIA report this morning.

Today, trade will continue to dominate the headlines but there are two economic reports to watch: GDP (E: 4.0%) and Pending Home Sales (E: 0.0%). There are no Fed officials or other central bank events so from a catalyst standpoint, it will likely be another quiet session.

The dollar has been a good inverse proxy for trade sentiment recently so if we see a continued pullback, stocks can continue to flirt with new highs, however any material rebound in the dollar index today will likely pressure US shares (the greenback is slightly higher so far).

Finally, I’ll be joining Liz Claman on Fox Business’s “Countdown to the Closing Bell” this afternoon at 3:00  p.m. ET to discuss the outlook for the markets and opportunities for investors as we head into the final four months of the year.

To access the full analysis Go Here

EIA Report Analysis and Oil Update, September 8, 2017

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Yesterday’s EIA report was taken with a grain of salt, as the effects of Hurricane Harvey badly skewed the data resulting in a print that was basically worthless from a fundamental analysis standpoint. As would be expected with a large number of refinery outages, crude stocks rose +4.6M bbls, but that was slightly less than estimates calling for a +5.0M build.

EIA Report Analysis and Oil Update

Meanwhile, both gasoline and heating oil inventories declined (as refineries runs were way down) by -3.2M bbls and -1.4M bbls, respectively (but both declines were smaller than expected). On balance, the headline prints were largely dismissed. WTI finished the day down 0.22% while RBOB gasoline futures fell 0.98%.

The production portion of the report was a little shocking at first glance, but at the same time, the data made sense when you consider the impact Harvey had on the Gulf Coast oil industry. Lower 48 production declined -783K b/d last week, or 94% of the 2017 output gains.

For perspective, the average weekly change coming into this week was +24K b/d. Like the headlines, the production data was largely overlooked by traders because the data was so badly skewed by Hurricane Harvey.

Looking ahead, it will be very important to watch the production data. If output does not recover in a swift manner that will be a bullish supply side development, as the relentless grind higher in US oil output has been the single-largest headwind for oil prices this year. For now, the outlook for oil is neutral with a bias to the downside, as nothing has changed materially enough to push futures through resistance between $50 and $54/barrel in WTI.

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EIA Report & Oil Update, August 24, 2017

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Yesterday’s EIA data was relatively in line with expectations, and the market reacted accordingly with a very choppy and insignificant response. Gasoline stocks did fall more than expected, and as a result RBOB futures outperformed WTI futures, which closed up 1.72% and 1.09%, respectively.

On the headlines, crude oil stocks fell -3.3M bbls vs. (E) -3.1, which also roughly matched the -3.6M bbl draw reported by the API late Tuesday. The change in gasoline supply was the only real surprise in the data print as stockpiles fell -1.2M vs. (E) -500K. And compared to the API, which reported gasoline inventories rose +1.4M bbls, that data point favored the bulls.

The rising trend of lower 48 production remains the most important influence on the energy markets right now, and there was a potential sign of fatigue in that figure as it rose just 12K b/d vs. the 2017 average of 25K b/d. In theory that is a slightly bullish influence, but it is only one report and US output did hit another multi-year high in this most recent release, which is still longer-term bearish. Additionally, Alaskan production continued to stabilize and show signs of turning higher into the fall, as production rose 14K b/d to the highest level since mid-July.

Bottom line, US production continues to trend higher despite a slight pullback in pace last week. And as long as US production is grinding to new multi-year highs, it will be a headwind on the entire complex, and the $50/barrel mark will continue to be a stubborn psychological and technical resistance level for WTI.

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