US natural gas rig count
Baker Hughes (BHI) is scheduled to release its weekly US natural gas rig count report on June 10, 2016. The active weekly US natural gas rig count fell by five rigs to 82 rigs for the week ending June 3, 2016—compared to the previous week. The rig count fell by 5.7% week-over-week. It fell by 63.1% year-over-year. The trend could continue this week.
Peaks and lows
The US natural gas rig count peaked at 1,606 rigs on September 12, 2008. In contrast, it hit a new low of 82 rigs in the week ending June 3, 2016. This was the lowest level in the last 29 years. US drilling activity fell due to lower natural gas prices. Natural gas prices fell due to oversupply. For the latest on natural gas prices, read the first part of this series.
EIA’s monthly drilling report
The EIA (U.S. Energy Information Administration) is scheduled to release its monthly drilling report on June 13, 2016. In the previous month’s report, it estimated that natural gas production in the seven major shale regions would decline in June 2016—compared to the previous month. Production is estimated to fall by 464 MMcf (million cubic feet) per day to 45,972 MMcf per day for the same period.
The fall in drilling activity has a negative impact on oil drillers and oil producers such as Rowan Companies (RDC), Diamond Offshore (DO), Atwood Oceanics (ATW), and Transocean (RIG). The fall in the drilling activity also impacts natural gas production. We’ll analyze this in Part 5 of this series.
Impact on ETFs
Volatility in natural gas prices impacts ETFs and ETNs such as the Guggenheim S&P 500 Equal Weight Energy ETF (RYE), the United States Natural Gas Fund (UNG), and the VelocityShares 3x Inverse Natural Gas ETN (DGAZ).
In the next part of this series, we’ll take a look at the U.S. Commodity Futures Trading Commission’s “Commitments of Traders” report.
PointLogic reported that natural gas supplies fell slightly to 79.2 Bcf (billion cubic feet) per day from 79.6 Bcf per day for the week ending June 8, 2016.
Broadcom (AVGO) stock fell ~8.5% after markets closed yesterday following the semiconductor giant's fiscal 2019 second-quarter earnings release. It missed analysts' revenue estimate and cut its fiscal 2019 revenue guidance by $2 billion to $22.5 billion due to sluggishness in its semiconductor solutions business.
The SPDR Gold Shares ETF (GLD), which tracks physical gold prices, has underperformed the broader markets year-to-date, rising just 4.4% compared to the S&P 500’s (SPY) gain of 15.9% as of June 14. The sentiment for gold, however, has been turning around.
Safe havens such as Treasuries and gold were back in favor on June 14 as stocks fell due to rising tensions in the Middle East, concerns over growth, and the looming threat of the US-China trade war. The tech-heavy Nasdaq Composite Index fell 0.67% in the first hour of trading.
Lululemon (LULU) stock rose 2.1% on June 13 in reaction to better-than-expected first-quarter results and an upgraded outlook for fiscal 2019 overall. The company's first-quarter adjusted EPS grew 34.5% to $0.74 on revenue growth of 20.4% to $782.32 million. Analysts had expected EPS of $0.70 and revenue of $755.31 million. Here's why the outlook got an upgrade.
As of 4:40 AM Eastern Time today, US crude oil active futures were at $51.83, ~4% below their closing level in the previous week. If US crude oil prices stay at those levels today, they'll mark their third week of decline in five weeks.
Amazon is discontinuing its Amazon Restaurants service, which has been delivering food for restaurants in parts of the United States. Amazon Restaurants launched in the United States in 2015 and entered the British market the following year. However, it met strong opposition in the British market.