The Markets and Economy
Markets last week showed strength (at least for now) as the Dow jumped 5.4% and causing IBD to switch equities to “rally” mode after Friday’s massive 823 point surge on strong trading volume. Today’s action was a bit soft and traders digested gains (burp!) and the Dow pulled back 61 points on light volume to close at 31,439.
Natural gas prices have fallen recently due to an explosion at an LNG export terminal in Texas. Freemont LNG exports about 18% of US nat gas and because of the accident is off line for at least 3 months. The ripple effect of this incident is that gas has backed up in the US supply chain and is being resold to domestic users who are injecting it into storage or using it for current needs. This sudden supply increase for domestic consumption has driven prices lower and shows how much US efforts to supply Germany has increased the cost in the US. Meanwhile Russia seems to be taking advantage of the US mishap and has reduced gas flows to Germany by 60% saying that Nord Stream 1 is not at full capacity due to Siemens AG not delivering on maintenance contracts to the line. As a result, Germany is facing an energy crisis and in an effort to keep the system running has announced the restarting of several coal fired power plants. Once the Freemont facility is back online we could see nat gas prices increase again unless the world is in a recession by then. There are so many factors here its hard to know what will happen but the pullback in natural gas prices could be just a temporary lull.
Goldman Sachs published a research piece saying oil prices could move higher this summer citing strong demand while global production remains tight and supply chains are disrupted with China switching purchases to Russia while Europe moves away from Russia to the US and other suppliers. WTI crude oil today closed up 2% at $109.80 per barrel.
Items of Interest
Tuesday this week the scouts have a bus wash at the Dunnell home. Once our beloved White Whale has been washed (for the first time in 2 years!) it will be used to haul 27 scouts to Camp Meriwether in Oregon on July 2nd for summer camp. While the bus cuts down on cars and saves on fuel, this most likely will be the last time we use the bus because DOT regulations have made it virtually impossible to get CDL drivers licenses for parent volunteers. The bus was purchased in 2008 and outfitted with airplane seats from Alaska Air. The kids love it but the high cost of getting a CDL has put the kybosh on volunteer organizations like ours being able to operate full sized school buses.
The Markets and Economy