“I can give you a six-word formula for success: Think things through–then follow through.”
—Edward Rickenbacker
COVID-19 and Markets Update
The United States currently has 5,874,295 confirmed COVID-19 cases and 180,605 confirmed deaths. Looks like we are on a pretty decent decline in new cases being reported and hopefully we can put this nightmare behind us soon (See Chart)
New COVID-19 Cases Reported Each Day
Source: Centers for Disease Control and Prevention (CDC)
The U.S. Labor Department stated on Thursday of last week that U.S. workers filed an additional 1.1million jobless claims, bringing the total job losses since the coronavirus pandemic (COVID-19) to 55.26 million. Economists polled by Dow Jones expected a total of 923,000 and news came in higher than expected.
The DOW did close higher on Friday, up 190.60 points (+0.69%) to finish out the week at 27,930.33 which was flat week over week. The S&P 500 traded higher 11.65 points (+0.34%) on Friday, closing at 3,397.16 up 24.31 points week over week. The Nasdaq finished Friday’s session higher as well, gaining 46.85 points (+0.42%) closing out the week at 11,311.80 up 292.50 points week over week. In overnight trading, DOW futures traded higher and are expected to open up this morning 224 points.
West Texas Intermediate (WTI) traded down 48¢ to close at $42.34 on Friday of last week on the New York Mercantile Exchange, up 33¢ per barrel week over week.
Brent traded down .55¢ cents to close at $44.35 on Friday of last week, a loss of .28¢ per barrel week over week.
U.S. crude inventories fell by 1.6 millionbarrels last week and now stand at 512.5 million barrels according to the EIA. Net U.S. crude imports rose by 1.1 million bpd to 3.6 million bpd
Gasoline inventories were down by 3.3 million barrels while distillate inventories rose by 152,000 barrels. Fuel demand dropped by more than 2 million bpd to 17.2 million bpd in terms of product supplied. Overall fuel demand is down 14 per cent year over year over the last four weeks. As the summer driving season comes to a close, overall fuel demand declines.
Oil is higher in overnight trading and, as of the writing of this report, WTI is poised to open at $42.67 up 33¢/ barrel from Friday’s close
Things we are keeping an eye on:
The Economy – what is troubling, folks, is the number of jobs being lost coupled with continued government spending and the checks that are being cut as we dive further into debt.We are consuming at a much reduced rate pre-COVID, but when all the stimulus pay stops and credit cards are full, we could see another round of demand destruction from current levels as people will simply stop spending money they don’t have or can get having a trickledown effect on the overall economy. It is not looking like a v-shaped recovery – we sure hope we are wrong and create manufacturing jobs here in the U.S. ASAP!
Watching Hurricanes and Fires – If 2020 wasn’t bad enough already, we have two storms in the gulf headed for Louisiana. The storms will have cooling effect on the South reducing gas fired generation demand, any Crude oil supply disruptions will have a positive impact on pricing on an already over supplied crude oil market as some analysts predict that more cuts need to be made in the range of 2 Million barrels per day to put us back in balance. Some countries such as Iraq and Nigeria failed to meet cut targets set by OPEC+ and are coming under pressure from other OPEC+ members, including OPEC leader Saudi Arabia, to reduce production to ensure they comply by the end of September. Natural gas which is already overbought may rally yet again if the twin hurricanes deliver any infrastructure damage. Infrastructure damage should be limited given the intensity of the twin storms as of the writing of this report tropical storm Marco is expected to hit landfall along the coast of Louisiana with maximum sustained winds of 65 miles per hour as and hurricane Laura is expected to hit landfill between Louisiana and Texas with maximum sustained winds of 96 – 100 mph as a category 2 hurricane.
Atlantic Disturbances Source: National Hurricane Center
If California was not a mess already there is over 5,000 wild fires that have started since January – a record. Right now, two of the biggest and most destructive fires on record rages in the state disrupting rail among other things. The LNU Lighting Complex which is the fires name is burning out of control in Sonoma and Napa and is 341,243 acres in size and has already burned down 560 structures and killed four people so far. Next on the list is the SCU Lightening Complex in the Santa Clara area that is 291,968 acres and has consumed 5 structures with 0 deaths thankfully so far.
Canadian Crude oil is still having a difficult time. We keep waiting for some sort of a break out to the upside where the economics work for crude by rail but had a little bit of a setback last week with a larger than expected initial jobless claims report and a lower than expected draw out of storage. More barrels have been brought on in Canada and the fight for pipeline capacity is increasing as Enbridge goes into pipeline apportioned mode for the third consecutive month for September delivery. WSC – WTI-CMA for October delivery settled at -$11.70 per barrel on Friday with an implied value of US$31.50 down $1.06 per barrel week over week. The four week rolling average of petroleum carried on North American railroads rose to 21,055 from 20,894 up 161 carloads week over week. CP shipments fell by 1.9% while CN’s shipments were down 4.5%.
Rig Count
North America rig count moved higher for the second week in a row this time with the U.S. adding rigs. The U.S. gained 10 rigs week over week and now has 254 active rigs. Canada gained 2 rigs week over week and Canada’s overall rig count rose to 56 active rigs Year over year we are down 745 rigs collectively.
North American Rig Count Summary
Source: Baker Hughes
We have been extremely busy at PFL with return on lease programs involving rail car storage instead of returning cars to a shop. A quick turnaround is what we all want and need. Railcar storage in general has been extremely active. Please call PFL now at 239-390-2885 if you are looking for rail car storage, want to trouble shoot a return on lease scenario or have storage availability. Whether you are a car owner, lessor or lessee or even a class 1 that wants to help out a customer we are here to “help you help your customer!”
North American Rail Traffic
Total North American rail volumes were down 7.5% year over year in week 33 (U.S. -6.9%, Canada -8.9%, Mexico -10.7%), resulting in quarter to date volumes that are down 8.8% and year to date volumes that are down 11.3% (U.S. -12.2%, Canada -8.5%, Mexico -10.8%). 9 of the AAR’s 11 major traffic categories posted year over year declines with the largest decreases coming from coal (-30.9%), nonmetallic minerals (-17.9%), petroleum (-24.9%) and metallic ores & metals (-12.6%). The largest increase came from grain (+13.8%).
In the East, CSX’s total volumes were down 4.1%, with the largest decrease coming from coal (-36.2%) and the largest increase coming from intermodal (+7.4%). NS’s total volumes were down 7.8%, with the largest decreases coming from coal (-36.9%), petroleum (-48.6%) and metals & products (-20.9%).
In the West, BN’s total volumes were down 11.1%, with the largest decreases coming from coal (-30.9%), intermodal (-3.7%), petroleum (-32.5%) and stone sand & gravel (-42.8%). UP’s total volumes were down 6.9%, with the largest decreases coming from coal (-27.4%), stone sand & gravel (-35.8%), motor vehicles & parts (-22.4%) and petroleum (-30.2%). The largest increase came from intermodal (+5.8%).
In Canada, CN’s total volumes were down 8.2% with the largest decreases coming from intermodal (-6.8%) and petroleum (-34.8%). The largest increase came from grain (+47.1%). RTMs were down 4.4%. CP’s total volumes were down 12.8%, with the largest decreases coming from intermodal (-12.8%), petroleum (-55.4%) and coal (-36.4%). RTMs were down 11.4%.
KCS’s total volumes were down 2.8%, with the largest decrease coming from motor vehicles & parts (-23.1%). The largest increases came from grain (+29.4%) and petroleum (+22.3%).
Source: Stephens
Railcar Markets
PFL is seeking: 200 25.5 cpc 1232 cars for use in Mexico for 1-3 years for heavy fuel oil; 2 Covered hoppers for purchase, 5500 series, for storage at plant site in the Chicago area, BN or NS connection; 25 22-30K coiled and insulated for biodiesel in the Midwest off the UP, 6-12 months; 5-15 6000+ high sided gons, no interior bracing for purchase off the CN or CP Ontario destination. 5-10 31.8s food grade needed in the Midwest for service in Canada, US and Mexico, 5 year lease. 5-10 syrup cars are needed in the Midwest. Need 100 steel coal gons for sale. Seeking 100 4750’s for grain service in the Midwest, one year lease. Need ten 20K to 23.5 coiled and insulated for one year in ethylene glycol; Please contact PFL with any of these opportunities, it would be very much appreciated!
PFL is offering: Various tank cars for lease with dirty to dirty service including, nitric acid, gasoline, diesel and crude oil. Lease terms negotiable, short and long term opportunities available clean cars are available 1-5 years scattered across the country. Leases and subleases are available on 117Js and 117Rs. We have 455 117Js cleaned and recently lined for sale or lease in Texas. We have 207 CPC -1232’s for sale or lease also located in Texas. We have 61 ft. bulkhead flat cars, for lease. We have available 200 30K tankers cleaned and ready for service, for sale or lease. 100 5650 PD hoppers brand new 65 ft available for lease. We have 218 73 ft 286 GRL riser less deck, center part for sale, 28 auto-max II automobile carrier racks – tri-level for sale. PFL has a number of steel and aluminum hoppers for various commodities and tank cars, all for sale. Sand cars, box cars, coal cars and hoppers including sugar covered hoppers and plastic pellet cars are also available for sale and lease in various locations and terms. Call us today for further details!
Call PFL today to discuss your needs and our availability and market reach. Whether you are looking to lease cars, lease out cars, buy cars or sell cars call PFL today 239-390-2885
PFL offers turn-key solutions to maximize your profitability. Our goal is to provide a win/win scenario for all and we can handle virtually all of your railcar needs. Whether it’s loaded storage, empty storage, subleasing or leasing excess cars, filling orders for cars wanted, mobile railcar cleaning, blasting, mobile railcar repair, or scraping at strategic partner sites, PFL will do its best to assist you. We also assist fleets and lessors with leases and sales and offer Total Fleet Evaluation Services.We will analyze your current leases, storage, and company objectives to draw up a plan of action. We will save Lessor and Lessee the headache and aggravation of navigating through this rapidly changing landscape
PFL IS READY TO CLEAN CARS TODAY ON A MOBILE BASIS. WE ARE CURRENTLY IN EAST TEXAS
