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This Week in Baseball, or TWIB, is the weekly T.V. show that provides an overview of what has transpired in the baseball world over the past seven days.  It is a must view for any real baseball fan.  The Department of Energy of the U.S. Government is an incredible source for primary information about both domestic and international energy markets.  The Department of Energy also writes a weekly overview which is called TWIP, or This Week in Petroleum.  While much less sexy that TWIB, TWIP is a must read for those following the energy markets.  Every week we find a couple of interesting nuggets in TWIP and this week was no different.

As it relates to greenhouse gas emissions, TWIP noted this week that Energy Information Administration is going to start publishing greenhouse emission data on a monthly basis due to increased demand for this data.  They also highlighted a few facts from the 2008 report, which was just released.  Most notably was the following quote:

“The August 2009 STEO expects that the economic downturn, combined with a significant switch from coal to natural gas as a source of electricity generation in some U.S. regions, will lead to a 5-percent decline in energy-related CO2 emissions in 2009. In 2010, CO2 emissions from fossil fuels are forecast to increase by 0.7 percent, due to an improving economy (see Figure 2).”

This is probably a headline that most environmental groups won’t have us focused on, but it is noteworthy that greenhouse gases will be down almost 5% from 2009.  Obviously this is partially due to the economy, but, as noted above, we are also starting to see a real impact from the transition from coal to natural gas.  This is a key longer term trend for natural gas demand that we need to keep front and center, especially as the news around natural gas is currently overwhelmingly bearish and any incrementally bullish data points could change the tone of that market.

Another interesting data point was related to the pricing of gasoline and diesel.  Both gasoline and diesel are well below last year’s prices.  Diesel is currently priced at ~$2.67 per gallon, which is $1.45 below last year’s price.  While gasoline is priced at ~$2.61 per gallon, which is $1.07 below year ago prices.  From a consumer spending perspective though, as Howard Penney has been highlighting, there has been a dramatic increase year-to-date of both gasoline and diesel prices.  On the margin, this has obviously tightened the consumer’s ability to spend since the beginning of the year.

The final noteworthy data point was related to the inventory data.  On aggregate petroleum inventories remain above their five year average and above year ago levels.   Crude oil inventories are slightly above the five average and gasoline inventories are slightly below, but distillate inventories are still dramatically above year ago levels and the five year average.  In fact, distillates (primarily diesel and heating oil) are at almost 50 days of supply versus 30 days from a year ago.  The implications of this oversupply is likely negative for the margins of refineries in the intermediate term.

Daryl G. Jones
Managing Director