Energy Market Watch: February 2017
February may be the shortest month of the year, but it’s one of the most important for energy. It’s unique blend of winter weather and political shifts means February can set the tone for quarters to come. Add in the first clear look at an ongoing OPEC production cut and it’s safe to say that 28 days is plenty of time to make the markets pay attention.
February 5: Super Bowl LI
Energy may not be the first thing that comes to mind when thinking Super Bowl (although this year it might make sense, considering it’s being played at NRG Stadium. As it turns out though, energy ties run deep for Super Bowl 51. By one estimate, the Super Bowl can add more than 70 gigawatt-hours of electricity use to the U.S. grid.
Additionally, this year’s teams, the Atlanta Falcons and New England Patriots, hail from two of the most popular states (Georgia and Massachusetts) for new solar projects. Those teams will of course be facing each other in Houston, which is also headquarters to more than 15 energy-related and often oil-focused Fortune 500 companies. More than likely, energy will make an appearance in at least a few commercials — with Ford already previewing plans to tie energy efficiency into their multi-million dollar advertising campaign. Together, the Super Bowl may not move the energy spend for individual consumers, but it does showcase the range of the modern energy landscape.
February 13: OPEC’s Oil Market Report
On Feb. 13, OPEC will release its usual oil market report, complete with updated production figures and expectations for the future of global crude. Given that the report is released monthly, it’s usually published with relatively little fanfare outside the realm of dedicated oil traders. February’s edition is different though, as it will offer the first set of data since OPEC’s current production deal went into effect.
Early indications gathered through monitoring global tanker flows indicate the cartel is likely to see a high level of compliance from the February print, but details will matter. Every country is likely to come under the microscope and Saudi Arabia is sure to be fielding questions on their willingness to the other members in line. Overall, the report has a reasonable chance to offer some added bullishness to oil prices, which in turn can boost prices for natural gas, propane and other fuel sources in markets throughout the world.
February 23-26: Democratic National Committee (DNC) Chair Election
Later this month, Democrats will take up the task of selecting a new party chair. Early indications suggest strong support for Minnesota representative Keith Ellison, but several candidates remain in the running. Regardless of who is successful in taking on the position, the new chair is capable of having a significant impact on energy policy. They will be charged with helping to decide which policies Democrats prioritize in the years ahead, as well as attempting to drum up support ahead of midterm elections.
With Republicans and Democrats already clashing on areas like climate change, fossil fuel legislation and the proper role of renewable energy, the actions of the new party lead will inevitably filter through to energy markets. Determining the new chair and getting an early sense of where energy policy ranks on the priority list is sure to have a long-term impact on the American energy landscape.
February 28: GDP Data
Gross domestic product (GDP) numbers have made a few appearances in previous editions of our energy market watch and for good reason. The undisputed king of economic data points, GDP is often used as a reference to sum up the complex state of the overall economy into one neatly packed number. This month’s figure will provide a closer look at GDP for Q4 of last year, with initial indications pointing to the fairly mundane. Regardless, the data provides a picture of the current state of the economy, as well giving President Trump’s administration a clearer view of the kind of economy they’ve inherited.
For energy, GDP numbers can have an immediate effect on the value of the U.S. dollar. That impacts everything from oil prices to global liquefied natural gas, which can have a serious impact on power prices in many markets.
Though a short month, it’s action packed and energy markets are taking advantage. Check back next month for dates that will move economies and energy markets in March and beyond.
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