We’re nearing the mid-point of the calendar year, and July brings a new batch of dates and events that will have a major impact on the financial and energy markets. And while LeBron James may have received the MVP award for the NBA Finals in June, King James’ crown might be handed over to the job market in the coming month.
July 1, 8, 15, 22 and 29: Baker Hughes’ Oil Rig Count
When it comes to the power of market forces, the “invisible hand” is a common term used to describe the benefit to society when a person acts in their own self interest. However, for oil field services companies such as Baker Hughes, the recent energy market has felt more like an invisible right hook. Over the last two years, low oil prices have translated to an 80-percent drop in the number of operational oil rigs in the U.S. as producers look to cut costs and squeeze profits.
That trend could be changing though, with June already posting two separate reports of increasing rig counts as oil prices trade near $50 per barrel. It’s a big deal, since a U.S. oil production rebound will likely need the rig count to lead the way. Baker Hughes’ weekly print will be firmly under the magnifying glass as result, with a surprise swing in either direction capable of moving oil prices around the world.
July 8: The Employment Situation
The “Employment Situation” is the name given to a collection of highly influential employment figures, including unemployment, labor force participation and non-farm payrolls. While the numbers are always sure to grab Wall Street’s attention, they’ll be under extra scrutiny this round after June’s print was less of a “situation” and more of an unmitigated disaster. Despite a drop in the unemployment rate, initial figures showed U.S. non-farm payrolls added a meager 38,000 jobs in May, sending the indicator to its lowest point since 2011. That shut the door on a June rate hike from the Federal Reserve, but it still left the window cracked for July. Next month’s employment data should go a long a way in determining just how feasible a hike could be.
July 13: EIA Petroleum Status Report
While the Energy Information Administration’s (EIA) petroleum data is released via a weekly report, one particular date stands out from the crowd. On July 13, EIA will offer up details on gasoline demand and the impact on the country’s overall refined product supply after U.S. Independence Day. With gas prices and unemployment both relatively low, millions of Americans are expected hit the nation’s highways. Since U.S. gasoline inventories at record seasonal highs, that boost in travel is being counted on to provide a bit of relief. If demand’s a dud though, refiners could be in for a long summer, potentially rippling back to crude prices and undermining any continued rally.
July 18 and 25: Republican and Democratic Conventions
Conveniently, this year’s conventions should provide a topic for cordial debate among family members, especially those with diverging political views, this July 4. (Hide potential projectiles and sharp objects just in case.) More importantly for energy though, these conventions — and the ensuing election — come at an inflection point for the country’s energy mix. With both a spot on the Supreme Court and the Environmental Protection Agency’s Clean Power Plan still in limbo, the next president of the U.S. will have a profound impact on America’s generation mix and the nation’s response to climate change.
While we can expect both candidates to generally adopt their party’s approach to energy policy and regulation, the convention could offer the best window yet into what a Trump or Clinton presidency could mean for things such as renewables, fracking and coal regulation.
July 26-27: U.S. Fed Meeting
Déjà vu? No surprise there. Much like Drake, the Federal Reserve is going back to back and social media is sure to be buzzing. In June, disappointing jobs numbers and a looming Brexit vote prevented the Fed from taking any action on interest rates. While a July hike is being given only an outside shot — under 25 percent according to the latest market calculations — that could shift substantially over the course of the month, due in no small part to the outcome of all the above dates. With fed rates trickling down to everything from crude prices to credit card rates, July may be saving the best (or worst) for last.
It’s going to be a busy month, one that could bring fireworks long beyond July 4.
And in the blink of an eye, August and another Energy Market Watch will be here. More to come.