Oil and Gas futures give back part of yesterday’s rally, here’s why
Oil and Gasoline
futures declined as the latest reports showed Hurricane Rita no longer on course
to strike production facilities in the Gulf of Mexico and OPEC
maintained their production quota but did agree to make another 2-million BPD of
crude oil available for 3 months from October 1. A hurricane warning is in
effect for the Florida Keys, Rita was upgraded to a category-2 hurricane with
winds up to 100-mph (full
report).
The
Minerals Management
Service report released earlier today showed a number of rigs and platforms
in the Gulf of Mexico have been evacuated as a precaution. The evacuations had
the effect of raising today’s shut-in statistics. Today’s shut-in oil production
is equivalent to 58.49% of the daily oil production. Approximately 35% of
shut-in oil is due to onshore infrastructure problems. Shut-in gas production is
equivalent to 34.82% of the daily gas production.
The entire energy complex closed lower. Natural Gas
-1.76%, Heating Oil -1.28%, Harbor
Unleaded Gas -2.77% and Crude Oil 1.94%. November Crude Oil closed at
$66.20.
The Federal Reserve, announced that it has
raised its target for the federal funds rate by 25 basis points to 3.75%. In an
unusual move, the vote of the FOMC was not unanimous, with Federal Reserve
Governor Mark Olson dissenting. According to the Fed, Olson preferred to keep
rates unchanged.
In the policy statement that accompanied
its interest rate decision, the FOMC repeated its promise to raise rates at a
“measured” pace, wording that has become the chorus of the current rate-hiking
cycle. Specifically, the Fed stated that with “underlying inflation expected to
be contained, the committee believes that policy accommodation can be removed at
a pace that is likely to be measured.”
Click here for the press release in full.
The fall in energy prices and the FOMC
decision led to selling in the treasury market.
10yr T-Note -0.04%, 5yr T-Note -0.14% and 2yr T-Note -0.12%.
The softs mixed again with Coffee
+7.25%, Lumber
+2.29% and Cocoa 0.51% closing higher.Â
Cotton -2.66%, Frozen Orange Juice -1.13% and Sugar -1.28%
closing lower.
Wheat +0.31% and Corn +0.24% rose, while Soybeans -0.69%
fell among the major grain contracts.
The livestock group was mixed, Lean Hogs +1.32%and Pork Bellies
+2.47% ended the session with gains. Feeder
Cattle -0.44% and Live Cattle -0.23% with losses..
The metals were mixed, with only Palladium -1.29%
moving more than 1-percent.
Economic News
ICSC-UBS Store Sales:
Store Sales, W/W Change – Actual -2.1%
Housing Starts:
Starts – Actual 2.009 M Consensus 2.040 M
Permits – Actual 2.124 M Consensus N/A
State Street Investor Confidence Index:
Actual 84.0
FOMC Meeting Announcement:
Federal Funds Rate – Actual 3.75% Consensus 3.75%
Ashton Dorkins