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US oil prices fell for a second straight week, following a four week run up on increasing hostilities in the Middle East & Eastern Europe, after Iran and Israel exchanged attacks on each other’s territories but played down the likelihood of further counter-strikes…after falling 1.4% to $85.66 a barrel last week as ongoing ceasefire talks between Israel and Hamas in Egypt tempered the geopolitical risk premium underlying oil price strength, the contract price of the benchmark US light sweet crude for May delivery fell from a five week high in late weekend trading, after most of the 300 drones and missiles fired at Israel by Iran on Saturday were intercepted and did no damage. then moved lower in Monday as the risk premium associated with Iran’s threats eased after Iran said it considers its retaliation to be over, but pared those losses after Reuters reported that Israel’s Netanyahu had summoned his war cabinet for the second time in less than 24 hours and settled 25 cents, or 0.3% lower, at $85.41 a barrel, as strong retail sales increased the likelihood that US interest rates would remain higher for longer and reduce demand for oil…oil prices rose in Asian trading early Tuesday amid unresolved tensions in the Middle East and better-than-expected economic data from China, the world’s largest oil importer, and opened higher in New York, but gave up their gains and sold off to a low of $84.05 by mid-morning, as lowered geopolitical tensions allowed the market to retrace its previous rise, but partly recovered to settle just 5 cents lower at $85.36 a barrel as disappointing domestic economic data ​o​ffset Mideast supply fears…oil prices declined during early Asian trade Wednesday, following the late Tuesday release of American Petroleum Institute data reflecting bearish demand in the US, then extended their decline in US trading after the EIA confirmed the unexpected build in U.S. crude inventories, and settled $2.67 lower at $82.69 a barrel after Fed chair Powell stated that monetary policy needs to be restrictive for longer due to recent stronger-than-expected inflation readings….oil prices fell for a fourth day in overseas markets Thursday, following data indicating weak oil demand in the US, the world’s largest oil consumer, and the growing opposition to the conflict in Palestine. but bounced off March lows in US trading to settle 4 cents higher at $82.73 a barrel, even as the international benchmark Brent and oil product prices remained in negative territory for the fourth consecutive session….oil prices spiked by over 4% in global markets on Friday after Israel carried out a series of strikes on Iran, including a site near their nuclear facilities, but backed off the highs in the New York session to settle 41 cents higher at $83.14 a barrel, after Tehran played down the incident and said it did not plan to retaliate​, and ​thus left oil prices down 2.9% on the week..

meanwhile, natural gas prices finished lower for the third time in four weeks, weighed down by a massive glut of gas in storage, and by negative spot power and gas prices in the Southwest US, where producers have been paying to have their natural gas disposed of…after falling 0.8% to $1.770 per mmBTU last week as producers exited the winter with almost 39% more gas in storage than normal for ​that time of year, the contract price for natural gas for May delivery opened six cents lower on Monday, on the lack of technical and fundamental support, and then fell steadily after ​bouncing to an intraday high of $1.746 at 10:00AM to settle 7.9 cents lower at $1.691 per mmBTU, on light seasonal demand, soft export data, and bullish production estimates….natural gas prices trended lower through midday Tuesday due to weak fundamentals, but spiked to an intraday high of $1.802 at 2:05PM after TC Energy reported “an incident” on their Nova Gas Transmission Ltd. (NGTL) system in Alberta, before retreating to settle 4.1 cents ​h​igher at $1.732 per mmBTU after TC Energy reported the affected section of the pipeline had been isolated and shut down..natural gas prices opened two cents lower and slid from the opening on Wednesday as TC Energy was able to contain the ruptured pipeline and fire, avoiding any material disturbances to operations, but mounted a recovery into the afternoon to close 2.0 cents lower on Wednesday at $1.712 per mmBTU on mild weather forecasts, an earlier drop in feedgas to LNG export plants​, and worries about the huge surplus of gas in U.S. storage…natural gas prices moved up early Thursday as traders assessed a mixed weather outlook against lighter production readings, then jumped after the EIA reported an injection of natural gas into storage that was in line with expectations and settled 4.5 cents higher at $1.757 mmBTU​, on forecasts for cooler weather next week than had been expected​, and on an increase in the amount of gas flowing to LNG export plants, including Freeport…after volatile trading on Friday, natural gas prices finished little changed​, slipping a half cent to $1.752 per mmBTU, as bullish forecasts for cooler weather next week and a continued drop in output offset bearish negative spot power and gas prices in the Southwest and a massive oversupply of gas in storage, and thus settled 1.0% lower for the week…

The EIA’s natural gas storage report for the week ending April 12th indicated that the amount of working natural gas held in underground storage rose by 50 billion cubic feet to 2,333 billion cubic feet by the end of the week, which left our natural gas supplies 424 billion cubic feet, or 22.2% above the 1,909 billion cubic feet that were in storage on April 12th of last year, and 622 billion cubic feet, or 36.4% more than the five-year average of 1,711 billion cubic feet of natural gas that had typically been in working storage as of the 12th of April over the most recent five years…the 50 billion cubic foot addition to US natural gas working storage for the cited week was in line with the 50 billion cubic foot addition to storage that analysts in a Reuters poll had forecast, but it was less than the 61 billion cubic feet that were added to natural gas storage during the corresponding second week of April 2023, and less than the average 61 billion cubic foot injection into natural gas storage that has been typical for the second week of April over the past 5 years…

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending April 12th indicated that despite a big jump in our oil exports, we again had surplus oil to add to our stored commercial crude supplies for the tenth time in twelve weeks and for the 18th time in the past 26 weeks, essentially due to a big jump in oil supply that the EIA could not account for….Our imports of crude oil rose by an average of 27,000 barrels per day to an average of 6,461,000 barrels per day, after falling by an average of 183,000 barrels per day over the prior week, while our exports of crude oil jumped by 2,018,000 barrels per day to average 4,726,000 barrels per day, which when used to offset our imports, meant that the net of our trade in oil worked out to a net import average of 1,735,000 barrels of oil per day during the week ending April 12th, 1,991,000 fewer barrels per day than the net of our imports minus our exports during the prior week. At the same time, transfers to our oil supply from Alaskan gas liquids, from natural gasoline, from condensate, and from unfinished oils averaged 395,000 barrels per day, while during the same week, production of crude from US wells was unchanged at 13,100,000 barrels per day. Hence our daily supply of oil from the net of our international trade in oil, from transfers, and from domestic well production appears to have averaged a rounded total of 15,130,000 barrels per day during the April 12th reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,913,000 barrels of crude per day during the week ending April 12th, an average of 131,000 more barrels per day than the amount of oil that our refineries reported they were processing during the prior week, while over the same period the EIA’s surveys indicated that an average of 483,000 barrels of oil per day were being added to the supplies of oil stored in the US… So, based on that reported & estimated data, the crude oil figures provided by the EIA for the week ending April 12th appear to indicate that our total working supply of oil from net imports, from transfers, and from oilfield production was 1,166,000 barrels per day less than what what was added to storage plus our oil refineries reported they used during the week…To account for that difference between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a [+1,166,000 ] barrel per day figure onto line 16 of the weekly U.S. Petroleum Balance Sheet, in order to make the reported data for the supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there was an error or omission of that magnitude in the week’s oil supply & demand figures that we have just transcribed…Moreover, since 518,000 barrels of oil demand per day could not be accounted for in the prior week’s EIA data, that means there was a 1,684,000 barrel per day difference between this week’s oil balance sheet error and the EIA’s crude oil balance sheet error from a week ago, and hence the changes to supply and demand from that week to this one that are indicated by this week’s report are off by that much, and therefore nonsense…however, since most oil traders react to these weekly EIA reports as if they were accurate, and since these weekly figures therefore often drive oil pricing (as is obvious to anyone who watches oil prices), and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it’s published, and just as it’s watched & believed to be reasonably reliable by most everyone in the industry…(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer….there is also an aging twitter thread from an EIA administrator addressing these ongoing weekly errors, and what they had hoped to do about it)

This week’s average 483,000 barrel per day increase in our overall crude oil inventories came as an average of 391,000 barrels per day were being added to our commercially available stocks of crude oil, while an average of 93,000 barrels per day were being added to our Strategic Petroleum Reserve, the nineteenth SPR increase in twenty-six weeks, following nearly continuous withdrawals over the prior 39 months… Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports slipped to 6,437,000 barrels per day last week, which was 0.7% more than the 6,390,000 barrel per day average that we were importing over the same four-week period last year. This week’s crude oil production was reported to be unchanged at 13,100,000 barrels per day because the EIA’s rounded estimate of the output from wells in the lower 48 states was unchanged at 12,700,000 barrels per day, while Alaska’s oil production was 5,000 barrels per day lower at 431,000 barrels per day, but still added the same 400,000 barrels per day to the EIA’s rounded national total as it did last week…US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure matches that of our pre-pandemic production peak, and is also 35.1% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021.

US oil refineries were operating at 88.3% of their capacity while processing those 15,913,000 barrels of crude per day during the week ending April 12th, down from their 88.3% utilization rate of a week earlier, and a below normal operating rate for early April, as US refineries have lagged normal operating rates since arctic cold penetrated to the Gulf Coast in mid January and froze off some operations… the 15,913,000 barrels of oil per day that were refined this week were 0.4% more than the 15,844,000 barrels of crude that were being processed daily during week ending April 14th of 2023, but 1.0% less than the 16,078,000 barrels that were being refined during the prepandemic week ending April 12th, 2019, when our refinery utilization rate was also at a below normal 87.7%..

Even with the increase in the amount of oil being refined this week, gasoline output from our refineries was a bit lower, decreasing by 25,000 barrels per day to 9,417,000 barrels per day during the week ending April 12th, after our refineries’ gasoline output had decreased by 538,000 barrels per day during the prior week. This week’s gasoline production was 0.6% less than the 9,475,000 barrels of gasoline that were being produced daily over week ending April 14th of last year, and 5.1% less than the gasoline production of 9,917,000 barrels per day during the prepandemic week ending April 12th, 2019….at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 38,000 barrels per day to 4,601,000 barrels per day, after our distillates output had increased by 33,000 barrels per day during the prior week. Even after seven production increases in the past nine weeks, our distillates output was 3.1% less than the 4,750,000 barrels of distillates that were being produced daily during the week ending April 14th of 2023, and 4.6% less than the 4,823,000 barrels of distillates that were being produced daily during the week ending April 12th, 2019…

With this week’s decrease in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the ninth time in eleven weeks, decreasing by 1,154,000 barrels to 227,377,000 barrels during the week ending April 12th, after our gasoline inventories had increased by 715,000 barrels during the prior week. Our gasoline supplies fell this week because the amount of gasoline supplied to US users rose by 50,000 barrels per day to 8,662,000 barrels per day, and as our imports of gasoline fell by 21,000 barrels per day to 709,000 barrels per day, while our exports of gasoline fell by 152,000 barrels per day to 826,000 barrels per day.…After thirty-two gasoline inventory withdrawals over the past fifty-two weeks, our gasoline supplies were still 1.7% above last April 14th’s gasoline inventories of 223,544,000 barrels, but were about 4% below the five year average of our gasoline supplies for this time of the year…

With this week’s decrease in our distillates production, our supplies of distillate fuels fell for tenth time in thirteen weeks, following eight consecutive prior increases, decreasing by 2,760,000 barrels to 114,968,000 barrels over the week ending April 12th, after our distillates supplies had increased by 1,659,000 barrels during the prior week. Our distillates supplies fell this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 681,000 barrels per day to 3,666,000 barrels per day, even as our exports of distillates fell by 102,000 barrels per day to 1,478,000 barrels per day, while our imports of distillates fell by 14,000 barrels per day to 149,000 barrels per day.…Even with 30 inventory decreases over the past fifty-two weeks, our distillates supplies at the end of the week were 2.6% above the 112,090,000 barrels of distillates that we had in storage on April 14th of 2023, but were about 7% below the five year average of our distillates inventories for this time of the year…

Finally, even after our exports of crude oil jumped by nearly 75%, our commercial supplies of crude oil in storage rose for the 18th time in twenty-six weeks and for the 25th time in the past year, increasing by 2,735,000 barrels over the week, from 457,258,000 barrels on April 5th to 459,993,000 barrels on April 12th, after our commercial crude supplies had increased by 5,841,000 barrels over the prior week… With this week’s increase, our commercial crude oil inventories increased to about 1% below the most recent five-year average of commercial oil supplies for this time of year, while they were about 32% above the average of our available crude oil stocks as of the second weekend of April over the 5 years at the beginning of the past decade, with the big difference between those comparisons arising because it wasn’t until early 2015 that our oil inventories had first topped 400 million barrels. After our commercial crude oil inventories had jumped to record highs during the Covid lockdowns of the Spring of 2020, then jumped again after February 2021’s winter storm Uri froze off US Gulf Coast refining, but then fell due to higher exports relating to the Ukraine war, only to jump again following the Christmas 2022 refinery freeze offs, our commercial crude supplies as of this April 12th were still 1.3% less than the 465,968,000 barrels of oil left in commercial storage on April 14th of 2023, but were 9.1% more than the 421,753,000 barrels of oil that we still had in storage on April 15th of 2022, while still 6.7% less than the 493,017,000 barrels of oil we had in commercial storage on April 16th of 2021, after refinery damage from winter storm Uri left even more crude oil remaining after 2020’s pandemic precautions had left a glut of oil unused…

This Week’s Rig Count

In lieu of a detailed report on the rig count, we are again just including a screenshot of the rig count summary from Baker Hughes…in the table below, the first column shows the active rig count as of April 19th, the second column shows the change in the number of working rigs between last week’s count (April 12th) and this week’s (April 19th) count, the third column shows last week’s April 12th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting period a year ago, which in this week’s case was the 21st of April, 2023…

DUC well report for March

Monday of the past week saw the release of the EIA’s Drilling Productivity Report for April, which included the EIA’s March data on drilled but uncompleted (DUC) oil and gas wells in the 7 most productive shale regions (click tab 3)….that data showed an increase in uncompleted wells nationally for the first time in 13 months and for just the 4th time out of the past 46 months, as drilling of new wells increased while completions of drilled wells decreased in March, even as both​ still remained well below the average pre-pandemic levels….for the 7 sedimentary regions covered by this report, the total count of DUC wells increased by 9 wells, rising from a revised 4,513 DUC wells in February to 4,483 DUC wells in March, which was also 16.1% fewer DUCs than the 5,387 wells that had been drilled but remained uncompleted as of the end of March of a year ago…this month’s DUC increase occurred as 868 wells were drilled in the seven regions that this report covers (representing 87% of all U.S. onshore drilling operations) during March, up by 4 from the 864 wells that were drilled in February, while 859 wells were completed and brought into production by fracking them, down from the 866 well completions seen in February, and down from the 1,050 completions seen during March of last year….at the March completion rate, the 4,522 drilled but uncompleted wells remaining at the end of the month represents a 5.3 month backlog of wells that have been drilled but are not yet fracked, up from the 5.2 month DUC well backlog of a month ago, and up from the eight year low of 4.6 months of January 2023, on a completion rate that is still more than 20% below 2019’s pre-pandemic average…

the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, was up by 7 from a month earlier, rising from 813 DUC wells at the end of February to 820 DUC wells at the end of March, as 83 new wells were drilled into the Marcellus and Utica shales during the month, while 76 of the already drilled wells in the region were fracked..

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Major monthly reports released this past week included the March Consumer Price Index, the March Producer Price Index, and the March Import-Export Price Index, all from the Bureau of Labor Statistics, and the February report on Wholesale Trade, Sales and Inventories from the Census Bureau….meanwhile, a report released by the Fed late Friday of last week that we neglected to note then was the Consumer Credit Report for February, which indicated that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $14.1 billion, or at a 3.4% annual rate, as non-revolving credit expanded at a 0.9% annual rate to $3,712.4 billion and revolving credit outstanding grew at a 10.7% rate to $1,338.7 billion…

CPI Rose 0.4% in March on Higher Rent, Energy, and Insurance

The consumer price index was 0.4% higher in March, as higher prices for rent, gasoline, utilities, car insurance, medical care services including health insurance, transportation services, clothing, and internet services were just partly offset by lower prices for new & used vehicles, appliances, telephone hardware including smartphones, and recreational goods…the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the weighted average of seasonally adjusted prices of consumer goods and services was 0.4% higher in March, after being 0.4% higher in February, 0.3% higher in January, 0.2% higher in December, 0.2% higher in November, 0.1% higher in October, 0.4% higher in September, after rising by 0.5% in August, by 0.2% in July, by 0.2% in June, by 0.1% in May, by 0.4% in April, and by 0.1% in March of last year….

The unadjusted CPI-U index, which was originally set to have prices of the 1982 to 1984 period equal to 100, rose from 310.326 in February to 312.332 in March, which left it statistically 3.47738% higher than the index reading of 301.836 in March of last year, which is reported as a 3.5% year over year increase, up from the 3.2% year over year increase reported for February, with such widely cited year over year figures often telling us more about last year’s CPI changes than this years…with higher energy prices partly offset by flat prices for food, seasonally adjusted core prices, which exclude food and energy, were also up by 0.4% for the month, as the unadjusted core price index rose from 315.419 to 317.088, which left the core index 3.80128% ahead of its year ago reading of 305.476, which is reported as a 3.8% year over year increase, the same year over year core price increase that was reported in February, but well below the 6.6% annual increase reported for September 2022, which had been the largest annual increase in core prices in forty years..

The volatile seasonally adjusted energy price index rose 1.1% in March, after rising by 2.3% in February, but after falling by 0.9% in January, by 0.2% in December, by 1.6% in November and by 2.1% in October, but after rising by 1.2% in September, rising by 4.4% in August, and being unchanged in July, and is now 2.1% higher than in March of a year ago….the price index for energy commodities was 1.5% higher in March, while the price index for energy services was 0.7% higher, after it had risen by 0.8% in February….the energy commodity index was up 1.5% on a 1.7% increase in the price of gasoline and despite a 1.3% decrease in the price of fuel oil, as prices for other energy commodities, including propane, kerosene, and firewood, were on average 1.3% lower…within energy services, the price index for utility gas service was unchanged in March after rising 2.3% in February, but is still 3.2% lower than it was a year ago, while the electricity price index rose 0.9% in March after rising 0.8% in February… energy commodities are now averaging 0.9% higher than their year ago levels, with gasoline prices averaging 1.3% higher than they were a year ago, while the energy services price index is now up 3.1% from last March, as electricity prices are averaging 5.0% higher than a year ago…

Meanwhile, the seasonally adjusted food price index was 0.1% higher in March, after being unchanged in February, being 0.4% higher in January, 0.2% higher in December, 0.2% higher in November, 0.3% higher in October, 0.2% higher in September, 0.2% higher in August, and 0.2% higher in July, as the price index for food purchased for use at home was unchanged, after being unchanged in February, after being 0.4% higher in January, 0.1% higher in December, unchanged in November, and 0.3% higher in October, while the price index for food bought to eat away from home was 0.3% higher, as average prices at fast food outlets rose 0.3%, average prices at full service restaurants rose 0.2%, and prices of other food away from home averaged 0.6% higher…

In the food at home categories, the price index for cereals and bakery products was 0.9% lower, as bread prices fell 0.9%, the price index for breakfast cereal fell 1.6%, the price index for cakes, cupcakes, and cookies fell 1.0%, the price index for frozen and refrigerated bakery products, pies, tarts, turnovers fell 1.8% and the price index for rice, pasta, and cornmeal was 0.6% lower…on the other hand, the price index for the meats, poultry, fish, and eggs food group was 0.9% higher, as the price index for pork rose 1.1%, the price index for poultry rose 1.5%, and egg prices were 4.6% higher….however, the seasonally adjusted price index for dairy products was 0.1% lower, even as average milk prices rose 0.1%, as the price index for cheese and related products fell 0.3% and the price index for ice cream and related products was 0.5% lower….meanwhile, the fruits and vegetables price index was 0.1% higher, as the price index for fresh fruits rose 0.3% and canned fruit and vegetables prices averaged 0.6% higher….in addition, the beverages price index was 0.3% higher, as the price index for carbonated drinks rose 0.3%, the price index for noncarbonated juices and drinks was 0.6% higher, and the price index for coffee was 0.3% higher….lastly, the price index for the ‘other foods at home’ category was 0.5% lower, as the price index for sugar and sweets fell 0.8%, the price index for salad dressing fell 1.2%, the price index for peanut butter fell 2.4%, the price index for butter and margarine fell 2.7%, the price index for soups fell 0.9%, and the price index for salt and other seasonings and spices was 2.2% lower…

Among the seasonally adjusted core components of the CPI, which rose by 0.4% in March , after rising 0.4% in February, by 0.4% in January, by 0.3% in December, by 0.3% in November, by 0.2% in October, by 0.3% in September, by 0.2% in August, and by 0.2% in July, the composite price index of all goods less food and energy goods was 0.2% lower in March, while the more heavily weighted composite for all services less energy services was 0.5% higher….

Among the goods components of the core price index, which will be used by the Bureau of Economic Analysis to adjust October’s retail sales for inflation in national accounts data, the price index for household furnishings and supplies was 0.1% lower, as the price index for floor coverings fell 0.9%, the price index for laundry equipment fell 1.2%, and the minor appliance index was 1.9% lower….on the other hand, the apparel price index was 0.7% higher on a 2.6% increase in the price index for women’s outerwear, a 2.4% increase in the price index for women’s dresses, a 5.9% increase in the price index for girls’ apparel, and a 1.1% increase in the price index for men’s footwear…. however, the price index for transportation commodities other than fuel was was 0.5% lower, as average prices for new vehicles was 0.2% lower, the price index for used cars and trucks was 1.1 lower, and the price index for vehicle parts and equipment other than tires was also 1.1% lower….meanwhile, the price index for medical care commodities was 0.2% higher as prescription drug prices rose 0.3%, nonprescription drug prices fell 1.1%, and the price index for medical equipment and supplies was 0.6% higher…on the other hand, the recreational commodities index was 0.5% lower, as the price index for televisions fell 1.1%, the price index for toys fell 1.7%, the price index for audio equipment fell 2.4%, the price index for sporting goods including bicycles fell 1.6%, and the price index for newspapers and magazines was 1.0% lower… in addition, the education and communication commodities index was 1.2% lower on a 0.9% decrease in the price index for educational books and supplies, and a 1.8% decrease in the price index for telephone hardware, calculators, and other consumer information items.…lastly, a separate price index just for alcoholic beverages was 0.1% higher, while the price index for ‘other goods’ was 0.2% higher on a 0.2% increase in the price index for cosmetics, perfume, bath, nail preparations and implements and a 0.7% increase in the price index for cigarettes…

Within core services, the price index for shelter was 0.4% higher, as rents rose 0.5%, homeowner’s equivalent rent was 0.4% higher, prices for lodging away from home at hotels and motels were 0.1% higher, the price index for water, sewers and trash collection was 0.3% higher, and household operation costs were 0.8% higher on a 0.9% increase in prices for domestic services….at the same time, the price index for medical care services was 0.6% higher, as the price index for care of invalids and elderly at home rose 5.9%, the price index for outpatient hospital services rose 1.3%, and the price index for health insurance was 1.2% higher….moreover, the transportation services price index was 1.5% higher, as the price index for motor vehicle maintenance and repair rose 1.7%, the price index for parking fees and tolls rose 1.3%, and the price index for motor vehicle insurance rose was 2.8% higher…in addition, the recreation services price index was 0.1% higher, as the price index for veterinarian services rose 2.5%, and the price index for video discs and other media was 14.7% higher…at the same time, the price index for education and communication services was 0.2% higher, as the price index for postage and delivery services rose 0.4%, the price index for elementary and high school tuition and fees rose 0.3, and the price index for internet services and electronic information providers was 0.8% higher…lastly, the index for other personal services rose 0.8%, as the price index for funeral expenses rose 1.7%, and the price index for checking account and other bank services was 1.4% higher..

NB: a note on reporting consumer prices: most of the media, and even some economists, have been reporting the change in consumer inflation as a change from annual figures of one month to the next…that’s a misleading and sometimes nonsensical way of reporting it, because it often tells you more about what the inflation figures were during the same month of a year ago than in the current month…by way of illustrating the problem, let’s imagine that CPI figures in 2023 started with a 0.6% increase in January, then were unchanged in February, increased 0.6% again in March, then were unchanged again in April 2023, then rose 0.6% again in May of 2023, then continued alternating between rising 0.6% and being unchanged each month over the rest of the year…in 2024, however, we will say that inflation leveled off at a 0.3% increase every month in our hypothetical example…both years would show a 3.6% annual gain, maybe closer to 3.7% with compounding…but those who report inflation as a change between the annual figures would have reported inflation at 3.3% in January 2024 (because the January 2023 increase had dropped out of the comparison), then would have reported a 3.6% increase in February, then a 3.3% increase in March, and would report a 3.6% increase again in April, even if month over month inflation for 2024 stays unchanged at 0.3%…

Producer Prices Rose 0.2% in March on Higher Foods & Transportation Services

The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.2% in March, as the price index for finished wholesale goods fell 0.1% while the price index for final demand for services was 0.3% higher…that March increase followed a 0.6% PPI increase in February, when the price index for wholesale goods rose 1.2% and the price index for final demand for services was 0.3% higher, a 0.4% PPI increase in January, when the price index for finished wholesale goods fell 0.1%, while the price index for final demand for services was 0.6% higher; a 0.1% PPI decrease in December, when the index for prices of wholesale goods was 0.2% lower and the price index for final demand for services was 0.1% lower; a 0.1% PPI increase in November, when the average of prices for wholesale goods was 0.2% lower, while the price index for final demand for services was 0.2% higher; and an unrevised 0.3% PPI decrease in October, when the weighted average of prices for wholesale goods was 1.2% lower while the price index for final demand for services was 0.1% higher, and an unrevised 0.2% increase in September, when the weighted average of prices for wholesale goods was 0.9% higher and the price index for final demand for services was 0.1% lower….on an unadjusted basis, producer prices are 2.1% higher than a year ago, while the core producer price index, which excludes food, energy and trade services, was up 0.2% for the month, and is still 2.8% higher than it was a year ago…

As noted, the producer price index for final demand for goods was 0.1% lower in March, after being 1.2% higher in February, 0.1% lower in January, 0.1% lower in December, 0.2% lower in November, 1.2% lower in October. 0.9% higher in September, 1.7% higher in August, and 0.2% higher in July, and is now up 0.8% from a year ago….the final demand goods price index was down 0.1% in January as the price index for wholesale energy goods was 1.6% lower, after it had risen 4.1% in February, after falling 1.1% in January, by 0.8% in December, ny 2.0% in November, and falling by 6.4% in October, while the price index for wholesale foods was 1.0% higher, after rising 1.1% in February, but after falling 0.3% in January, being unchanged in December and after rising 0.7% in November, while the index for final demand for core wholesale goods (excluding food and energy) was 0.1% higher, after being 0.3% higher in February…

Wholesale energy prices were down 1.6% in February on a 3.6% decrease in wholesale prices for gasoline, a 6.6% decrease in wholesale prices for diesel fuel, and a 1.2% decrease in wholesale prices for residential natural gas, while the final demand for food price index was 0.8% higher on a 14.1% increase in the wholesale price index for processed young chickens, a 15.3% increase in the wholesale price index for fresh and dry vegetables, a 1.9% increase in the wholesale price index for finfish and shellfish, and a 2.5% increase in the wholesale price index for grains….among core wholesale goods, the wholesale price index for home electronic equipment rose 1.9%, the wholesale price index for sporting and athletic goods increased 2.0%, the wholesale price index for communication and related equipment rose 1.0%, and wholesale price index for metal cutting machine tools was 0.9% higher…

Meanwhile, the price index for final demand for services was 0.3% higher in February, after being 0.3% higher in February, 0.5% higher in January, after being unchanged in December, 0.2% higher in November, 0.1% higher in October, but 0.1% lower in September, 0.2% higher in August, and 0.8% higher in July, and is now 2.8% higher than a year ago…the price index for final demand for trade services r0se 0.3%, the price index for final demand for transportation and warehousing services rose 0.8%, and the core index for final demand for services less trade, transportation, and warehousing services was 0.2% higher….

Among trade services, seasonally adjusted margins for computer hardware, software, and supplies retailers rose 12.5%, margins for fuels and lubricants retailers rose 2.5%, margins for apparel retailers rose 1.9%, and margins for professional and commercial equipment wholesalers rose 8.3%, but margins for automobile retailers fell 5.8% and margins for TV, video, and photographic equipment and supplies retailers were 6.7% lower….among transportation and warehousing services, average margins for airline passenger services rose 2.2% and margins for truck transportation of freight rose 0.4%….among the components of the core final demand for services index, the price index for deposit services (partial) rose 2.7%, the price index for securities brokerage, dealing, investment advice, and related services rose 3.1%, the price index for passenger car rental rose 4.2%, and the price index for gaming receipts (partial) increased 2.5%…

This report also showed the price index for intermediate processed goods was 0.5% lower in March, after being 1.5% higher in February, 0.1% lower in January, 0.4% lower in December, 0.7% lower in November and 1.0% lower in October, but after rising 0.5% in September and by 2.0% in August….the price index for intermediate energy goods fell 1.5% in March as refinery prices for gasoline fell 3.6%, refinery prices for jet fuel fell 6.0%, the price index for industrial electric power fell 1.4%, the price index for commercial electric power fell 1.4%, and the price index for natural gas to electric utilities fell 6.4%… on the other hand, the price index for intermediate processed foods and feeds rose 0.6%, as the producer price index for processed poultry rose 10.7%, the producer price index for meats rose 0.8%, the producer price index for refined sugar and byproducts rose 0.8%, and the producer price index for dairy products rose 0.9%….however, the core price index for intermediate processed goods less food and energy goods was 0.4% lower, as the producer price index for plastic resins and materials fell 1.9%, the producer price index for steel mill products fell 7.8%, and the producer price index for air conditioning and refrigeration equipment fell 1.0%, while the producer price index for heating equipment rose 1.8%….average prices for intermediate processed goods are still 1.7% lower than in March 2023, the thirteenth consecutive year over year decrease, and are thus way down from their 26.6% year over year increase of November 2021, which had been a 46 year high…

Meanwhile, the price index for intermediate unprocessed goods fell 1.9% in March, after falling 0.7% in February, rising 1.4% in January, falling 4.1% in December, falling 2.1% in November and by 1.6% in October, after rising 2.9% in September, 2.1% in August and 2.5% in July….that was as the March price index for crude energy goods fell 6.9%, as crude oil prices fell 0.8%, unprocessed natural gas prices fell 37.0%, and coal prices were 1.9% lower…however, the price index for unprocessed foodstuffs and feedstuffs was 2.2% higher, on a 4.6% increase in producer prices for slaughter hogs, a 7.7% increase in producer prices for slaughter cattle, a 4.1% increase in producer prices for raw milk, and an 4.1% increase in producer prices for corn…meanwhile, the index for core raw materials other than food and energy materials was 0.2% higher on a 8.2% increase in the price index for nonferrous metal ores, a 5.0% increase in the price index for copper base scrap, and a 5.0% increase in the price index for recyclable paper….this raw materials price index is still 7.1% lower than a year ago, the fourteenth negative print after twenty-seven consecutive year over year increases, which came after the annual change on this index had been negative from the beginning of 2019 through October of 2020…

Lastly, the price index for services for intermediate demand was 0.2% higher in March, after being unchanged in February, 0.7% higher in January, 0.4% higher in December, and 0.5% higher in November, but after being unchanged in October, 0.3% higher in September, 0.1% lower in August, and 0.7% higher in July….the price index for intermediate trade services was unchanged, as margins for intermediate metals, minerals, and ores wholesalers rose 2.8% and margins for intermediate chemicals and allied products wholesalers rose 0.8%, but margins for machinery and equipment parts and supplies wholesalers fell 1.2% and margins for intermediate hardware, building material, and supplies retailers fell 1.4%….at the same time, the index for transportation and warehousing services for intermediate demand was also unchanged, as the intermediate price index for arrangement of freight and cargo fell 5.1%, but the intermediate price index for transportation of passengers rose 2.2%, and the intermediate price index for water transportation of freight was 1.1% higher…meanwhile, the core price index for intermediate services other than trade, transportation, and warehousing services was 0.3% higher, as the intermediate price index for securities brokerage, dealing, investment advice, and related services rose 3.1%,, the intermediate price index for investment banking rose 7.6%, the intermediate price index for deposit services (partial) rose 2.77%, and the intermediate price index for passenger car rental rose 4.5%…over the 12 months ended in March, the year over year price index for services for intermediate demand is now 3.6% higher than it was a year ago, the forty-second consecutive annual increase in this index, after it briefly turned negative year over year at the onset of the pandemic, from April to August of 2020, even as it is still much lower than the record 9.5% year over year increase indicated for July 2021…

February Wholesale Sales Up 2.3%, Wholesale Inventories Up 0.5%

The February report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at “$673.7 billion, up 2.3 percent (±0.4 percent) from the revised January level and .. up 0.8 percent (±1.1 percent)* from the revised February 2023 level”… the December 2023 to January 2024 percent change in sales was revised from the preliminary estimate of down 1.7 percent (±0.4 percent) to $663.9 billion a decrease of 1.8 percent (±0.5 percent) in conjunction with an annual revision of previously published data based on the results of the 2022 Annual Wholesale Trade Survey, and then was further revised to a decrease of 1.4% with this report….as an intermediate activity, wholesale sales are not included in GDP except insofar as they are a trade service, since the traded goods themselves do not represent an increase in the output of the goods sold….

On the other hand, the monthly change in private inventories is a major factor in GDP, as additional goods in a warehouse or on a store shelf represent goods that were produced but not sold, and this February report estimated that wholesale inventories were valued at $901.1 billion at month end, an increase of 0.5 percent (+/-0.4%) from the revised January level but 1.5 percent t (±0.9 percent) lower than February a year ago, with the January preliminary inventory estimate revised from the advance estimate of down 0.3 percent (±0.2 percent) to $895.1 billion to a decrease of 0.2 percent (±0.2 percent) to $896.5 billion, also reflecting both the annual revision and revisions included in this report….

For national accounts, the wholesale inventories reported here will be adjusted the February producer price indices…with notable exceptions such as inventories of farm products, chemicals and petroleum, we’ve previously estimated that wholesale inventories appear to be roughly 70% finished goods….with the February producer price index for finished goods up by 1.2% while the producer price indexes for intermediate goods & raw goods were 1.5% higher and 0.7% higher respectively, we can thus figure that February’s real wholesale inventories would have probably decreased by about 0.5%…since real wholesale inventories were up modestly the 4th quarter, February’s wholesale inventories real decrease will reverse that 4th quarter increase and also subtract both January’s and February’s real decreases from 1st quarter GDP…

  

(the above is the synopsis that accompanied my regular sunday morning news links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most of which are picked from the aforementioned GGO posts, contact me…)  

across the board inventory build despite distillates exports at an 18 month high on a 1.134 million barrel per day drop in demand for fuel

US oil prices fell for the first time in five weeks as ongoing ceasefire talks between Israel and Hamas in Egypt tempered the geopolitical risk premium underlying recent oil price strength….after rising 4.5% to a five month high of $86.91 a barrel last week on threats to supply from increasing hostilities in eastern Europe and the Middle East, the contract price for the benchmark US light sweet crude for May delivery fell nearly 3% in the opening minutes on Monday, after Israel reduced its troops in Gaza and sent a team to Egypt for talks with Hamas ahead of the Eid holidays, but recovered from a morning low of $84.69 to settle down just 48 cents at $86.43 a barrel, as the ceasefire talks between Israel and Hamas had reduced somewhat the geopolitical risk premium.…oil prices continued to trend lower in overnight trading amid ongoing talks for a ceasefire in Gaza, but rallied mid-morning after the commander of Iran’s navy said it could close the Strait of Hormuz, if deemed necessary. but faded again late to settle $1.20 lower at $85.23 a barrel as traders kept their eyes on the talks for a Gaza ceasefire….oil prices moved higher overnight after Israel’s Foreign Minister stated that Israel would attack Iran, if Iran attacked its territory in retribution for Israel’s deadly attack on its consulate in Syria, then slid back to unchanged early Wednesday morning after a hotter than expected consumer price report took demand-seducing rate-cuts off the table, then fell further after EIA data showed crude oil and fuel inventories swelled by much more than​ was expected on weak demand and lower oil exports, but rebounded to settle 98 cents higher at $86.21 a barrel after an Israeli airstrike killed the three adult sons and four grandchildren of Hamas political leader Ismail Haniyeh, clouding the prospect for a ceasefire between Israel and the militant group…oil prices rose in early Asian trading Thursday, on forecasts for strong demand in the US, the world’s biggest oil consumer, and rising concerns over global oil supply routes in the Middle East, but erased those gains early in the New York session, weighed down by the expectations that the Fed would not cut interest rates until September, instead of sooner, following a third consecutive higher than expected consumer inflation reading, and settled $1.19 lower at $85.02 a barrel, as weak domestic demand for fuel and concern over the effect of inflation on consumer spending prompted a pullback…however, oil prices surged 2% in early trading Friday, on intelligence reports suggesting that Iran would attack Israel within 48 hours, but pared those early gains to settle 64 cents higher at $85.66 a barrel, with trading shaped by the push-and-pull of U.S. macroeconomic indicators on the one​ h​and and the escalating rhetoric between Israel and Iran on the other…oil prices thus finished 1.4% lower for the week, after nearing a six-month high early in the week on concern that Iran would retaliate for a Israeli attack on Iran’s embassy in Damascus…

meanwhile, natural gas prices finished lower for the 2nd time in three weeks, as producers exited the winter with almost 39% more gas in storage than normal at this time of year… after rising 1.2% to $1.785 per mmBTU last week as ​more natural gas producers restrained their output, the contract price for natural gas for May delivery opened two cents higher on Monday and rose gradually throughout the ​s​ession, as production figures remained modest and weather forecasts were neutral, and settled 5.9 cents higher at $1.844 per mmBTU, amid expectations for a seasonally modest storage injection, as lower production offset the impact of mild spring weather…natural gas prices opened 4 cents higher on Tuesday, supported by maintenance-induced declines in production, but failed to maintain momentum and settled just 2.8 cents higher at $1.872 per mmBTU​, as speculation about potential disruptions to LNG exports out of Corpus Christi tempered early gains…natural gas prices opened 4 cents higher again on Wednesday on continued maintenance-induced production declines and on strong LNG export demand, but again backed off the early highs to settle 1.3 cents higher at $1.885 per mmBTU, with price gains limited by the huge amount of surplus of gas in storage and negative spot power and gas prices in parts of Texas, California and Arizona over recent weeks….natural gas prices opened 6 cents lower on Thursday, as traders apparently anticipated a bearish storage report, and continued falling to settle down 12.1 cents at a two week low of $1.764 per mmBTU following a larger-than-expected inventory increase and forecasts for benign weather and weak demand ahead….natural gas prices held near that level in Friday’s trading, on worries about a huge storage surplus and forecasts for lower demand over the next two weeks than previously expected, and settled six-tenths of a cent higher at $1.770 per mmBTU, and thus ended 0.8% lower for the week..

The EIA’s natural gas storage report for the week ending April 5th indicated that the amount of working natural gas held in underground storage rose by 24 billion cubic feet to 2,283 billion cubic feet by the end of the week, which left our natural gas supplies 435 billion cubic feet, or 23.5% above the 1848 billion cubic feet that were in storage on April 5th of last year, and 633 billion cubic feet, or 38.4% more than the five-year average of 1,650 billion cubic feet of natural gas that ​h​ad typically ​been in working storage as of the 5th of April over the most recent five years…the 24 billion cubic foot addition to US natural gas working storage for the cited week was more than the 15 billion cubic foot addition that the market was expecting, and it was also more than the 11 billion cubic feet that were added to natural gas storage during the corresponding first week of April 2023, while it matched the average 24 billion cubic foot injection into natural gas storage that has been typical for the first week of April over the past 5 years…

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending April 5th indicated that after a big drop in our oil exports, we again had surplus oil to add to our stored commercial crude supplies for 9th time in eleven weeks and for the 17th time in the past 25 weeks, despite a big jump in demand ​for oil that the EIA could not account for….Our imports of crude oil fell by an average of 183,000 barrels per day to an average of 6,434,000 barrels per day, after falling by an average of 85,000 barrels per day over the prior week, while our exports of crude oil fell by 1,314,000 barrels per day to average 2,708,000 barrels per day, which when used to offset our imports, meant that the net of our trade in oil worked out to a net import average of 3,726,000 barrels of oil per day during the week ending April 5th, 1,131,000 more barrels per day than the net of our imports minus our exports during the prior week. At the same time, transfers to our oil supply from Alaskan gas liquids, from natural gasoline, from condensate, and from unfinished oils averaged 393,000 barrels per day, while during the same week, production of crude from US wells was unchanged at 13,100,000 barrels per day. Hence our daily supply of oil from the net of our international trade in oil, from transfers, and from domestic well production appears to have averaged a rounded total of 17,219,000 barrels per day during the April 5th reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,782,000 barrels of crude per day during the week ending April 5th, an average of 115,000 fewer barrels per day than the amount of oil that our refineries reported they were processing during the prior week, while over the same period the EIA’s surveys indicated that an average of 919,000 barrels of oil per day were being added to the supplies of oil stored in the US… So, based on that reported & estimated data, the crude oil figures provided by the EIA for the week ending April 5th appear to indicate that our total working supply of oil from net imports, from transfers, and from oilfield production was 518,000 barrels per day more than what what was added to storage plus our oil refineries reported they used during the week…To account for that difference between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a [-518,000] barrel per day figure onto line 16 of the weekly U.S. Petroleum Balance Sheet, in order to make the reported data for the supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there was an error or omission of that magnitude in the week’s oil supply & demand figures that we have just transcribed…Moreover, since 360,000 barrels of oil suppl​y per day could not be accounted for in ​t​he prior week’s EIA data, that means there was a 878,000 barrel per day difference between this week’s oil balance sheet error and the EIA’s crude oil balance sheet error from a week ago, and hence the changes to supply and demand from that week to this one that are indicated by this week’s report are off by that much, and therefore ​useless…however, since most oil traders react to these weekly EIA reports as if they were accurate, and since these weekly figures therefore often drive oil pricing (as is obvious to anyone who watches oil prices), and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it’s published, and just as it’s watched & believed to be reasonably reliable by most everyone in the industry…(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer….there is also an aging twitter thread from an EIA administrator addressing these ongoing weekly errors, and what they had hoped to do about it)

This week’s average 919,000 barrel per day increase in our overall crude oil inventories came as an average of 834,000 barrels per day were being added to our commercially available stocks of crude oil, while an average of 85,000 barrels per day were being added to our Strategic Petroleum Reserve, the eighteenth SPR increase in twenty-five weeks, following nearly continuous withdrawals over the prior 39 months… Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to 6,508,000 barrels per day last week, which was 4.8% more than the 6,208,000 barrel per day average that we were importing over the same four-week period last year. This week’s crude oil production was reported to be unchanged at 13,100,000 barrels per day because the EIA’s rounded estimate of the output from wells in the lower 48 states was unchanged at 12,700,000 barrels per day, while Alaska’s oil production was 5,000 barrels per day higher at 436,000 barrels per day, but still added the same 400,000 barrels per day to the EIA’s rounded national total as it did last week…US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure matches that of our pre-pandemic production peak, and is also 35.1% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021.

US oil refineries were operating at 88.3% of their capacity while processing those 15,782,000 barrels of crude per day during the week ending April 5th, down from their 88.6% utilization rate of a week earlier, and a below normal operating rate for early April, as US refineries have lagged normal operating rates since arctic cold penetrated to the Gulf Coast in mid January​ and froze off some operations… the 15,782,000 barrels of oil per day that were refined this week were 1.7% more than the 15,585,000 barrels of crude that were being processed daily during week ending April 7th of 2023, but 2.0% less than the 16,100,000 barrels that were being refined during the prepandemic week ending April 5th, 2019, when our refinery utilization rate was also at a below normal 87.5%..

With the decrease in the amount of oil being refined this week, gasoline output from our refineries was somewhat lower, decreasing by 538,000 barrels per day to 9,442,000 barrels per day during the week ending April 5th, after our refineries’ gasoline output had increased by 767,000 barrels per day during the prior week. This week’s gasoline production was 1.2% less than the 9,557,000 barrels of gasoline that were being produced daily over week ending April 7th of last year, and 7.1% less than the gasoline production of 10,169,000 barrels per day during the prepandemic week ending April 5th, 2019….on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 33,000 barrels per day to 4,639,000 barrels per day, after our distillates output had decreased by 208,000 barrels per day during the prior week. After seven production increases in the past eight weeks, our distillates output was 1.2% more than the 4,583,000 barrels of distillates that were being produced daily during the week ending April 7th of 2023, but 7.9% less than the 5,038,000 barrels of distillates that were being produced daily during the week ending April 5th, 2019…

Even with this week’s decrease in our gasoline production, our supplies of gasoline in storage at the end of the week rose for the second time in ten weeks, increasing by 715,000 barrels to 228,531,000 barrels during the week ending April 5th, after our gasoline inventories had decreased by 4,256,000 barrels during the prior week. Our gasoline supplies rose this week because the amount of gasoline supplied to US users fell by 624,000 barrels per day to 8,612,000 barrels per day, and because our imports of gasoline rose by 242,000 barrels per day to 730,000 barrels per day, while our exports of gasoline rose by 115,000 barrels per day to 978,000 barrels per day.…After thirty-one gasoline inventory withdrawals over the past fifty-two weeks, our gasoline supplies were still 2.8% above last April 7th’s gasoline inventories of 222,245,000 barrels, but were about 3% below the five year average of our gasoline supplies for this time of the year…

With this week’s increase in our distillates production, our supplies of distillate fuels rose for 3rd time in twelve weeks, following eight consecutive prior increases, increasing by 1,659,000 barrels to 117,728,000 barrels over the week ending April 5th, after our distillates supplies had decreased by 1,268,000 barrels during the prior week. Our distillates supplies rose this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 510,000 barrels per day to 2,985,000 barrels per day, and because our imports of distillates rose by 59,000 barrels per day to 163,000 barrels per day, even as our exports of distillates rose by 184,000 barrels per day to an eighteen month high of 1,580,000 barrels per day.…Even with 30 inventory decreases over the past fifty-two weeks, our distillates supplies at the end of the week were 4.7% above the 112,445,000 barrels of distillates that we had in storage on April 7th of 2023, but were about 5% below the five year average of our distillates inventories for this time of the year…

Finally, after our exports of crude oil dropped by nearly a third, our commercial supplies of crude oil in storage rose for the 17th time in twenty-six weeks and for the 24th time in the past year, increasing by 5,841,000 barrels over the week, from 451,417,000 barrels on March 29th to 457,258,000 barrels on April 5th, after our commercial crude supplies had increased by 3,210,000 barrels over the prior week… With this week’s increase, our commercial crude oil inventories remained about 2% below the most recent five-year average of commercial oil supplies for this time of year, but were 31.8% above the average of our available crude oil stocks as of the first weekend of April over the 5 years at the beginning of the past decade, with the big difference between those comparisons arising because it wasn’t until early 2015 that our oil inventories had first topped 400 million barrels. After our commercial crude oil inventories had jumped to record highs during the Covid lockdowns of the Spring of 2020, then jumped again after February 2021’s winter storm Uri froze off US Gulf Coast refining, but then fell due to higher exports relating to the Ukraine war, only to jump again following the Christmas 2022 refinery freeze offs, our commercial crude supplies as of this April 5th were still 2.8% less than the 470,549,000 barrels of oil left in commercial storage on April 7th of 2023, but were 10.9% more than the 412,371,000 barrels of oil that we still had in storage on April 8th of 2022, while still 8.2% less than the 498,313,000 barrels of oil we had in commercial storage on April 9th of 2021, after refinery damage from winter storm Uri left even more crude oil remaining after 2020’s pandemic precautions had left a glut of oil unused…

This Week’s Rig Count

In lieu of a detailed report on the rig count, we are again just including a screenshot of​ the rig count summary from Baker Hughes…in the table below, the first column shows the active rig count as of April 12th, the second column shows the change in the number of working rigs between last week’s count (April 5th) and this week’s (April 12th) count, the third column shows last week’s April 5th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting period a year ago, which in this week’s case was the 14th of April, 2023…

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Major monthly economic reports released during the past week included the Employment Situation Summary for March and the Job Openings and Labor Turnover Survey (JOLTS) for February, both from the Bureau of Labor Statistics, the Commerce Department report on our International Trade for February, and the February report on Construction Spending and the Full Report on Manufacturers’ Shipments, Inventories and Orders for February, both from the Census Bureau..

Privately issued reports released this week included the ADP Employment Report for March, wherein the payroll processor estimated that private payrolls increased by 184,000, the light vehicle sales report for March from Wards Automotive, which estimated that vehicles sold at a 15.49 million annual rate in March, down from the 15.81 million annual sales rate in February, but up from the 14.89 million annual sales rate reported for March a year earlier, and both of the widely followed purchasing manager’s survey from the Institute for Supply Management (ISM): the March Manufacturing Report On Business indicated that the manufacturing PMI (Purchasing Managers Index) rose to 50.3% in March, up from 47.8% in February, which suggests that a small plurality of manufacturing purchasing managers saw better conditions during March for the first time in 17 months, while the March 2023 Services Report On Business reported their Services Index fell to 51.4%, down from 52.6% in February, also indicating that a small plurality of service industry purchasing managers reported expansion in various facets of their business in March…

Employers Added 303,000 Jobs in March, Unemployment Rate Fell to 3.8%

The Employment Situation Summary for March reported a payroll job increase that was well above expectations, and that both the labor force participation rate and the employment rate rose 0.2%, while the unemployment rate fell 0.1%….seasonally adjusted estimates extrapolated from the establishment survey data projected that employers added 303,000 jobs in March, after the previously estimated payroll job increase for January was revised was revised up by 27,000, from 229,000 to 256,000, while the payroll jobs increase for February was revised down by 5,000, from 275,000 to 270,000…so including those revisions, this report thus represents a total of 325,000 more seasonally adjusted payroll jobs than were reported last month…..the unadjusted data shows that there were actually 659,000 more payroll jobs extant in March than in February, as the usual seasonal job increases in sectors such as construction, administrative and waste services, and in leisure and hospitality were washed out by the seasonal adjustments…

Seasonally adjusted job increases in March were spread through both the goods producing and the service sectors and government, with only non-durable goods manufacturing showing a modest 4,000 job loss…since the BLS summary of the job gains by sector is clear and more detailed than our usual synopsis, we’ll just quote that summary here:

• Total nonfarm payroll employment rose by 303,000 in March, higher than the average monthly gain of 231,000 over the prior 12 months. In March, job gains occurred in health care, government, and construction. (See table B-1.)
• Health care added 72,000 jobs in March, above the average monthly gain of 60,000 over the prior 12 months. In March, job growth continued in ambulatory health care services (+28,000), hospitals (+27,000), and nursing and residential care facilities (+18,000).
• In March, employment in government increased by 71,000, higher than the average monthly gain of 54,000 over the prior 12 months. Over the month, employment increased in local government (+49,000) and federal government (+9,000).
• Construction added 39,000 jobs in March, about double the average monthly gain of 19,000 over the prior 12 months. Over the month, employment increased in nonresidential specialty trade contractors (+16,000).
• Employment in leisure and hospitality trended up in March (+49,000) and has returned to its pre-pandemic February 2020 level. Over the prior 12 months, job growth in the industry had averaged 37,000 per month.
• Employment in the other services industry continued its upward trend in March (+16,000). The industry had added an average of 8,000 jobs per month over the prior 12 months. Employment in other services remains below its February 2020 level by 40,000, or 0.7 percent.
• Employment in social assistance continued to trend up in March (+9,000), below the average monthly gain of 22,000 over the prior 12 months.
• In March, employment was little changed in retail trade (+18,000). A job gain in general merchandise retailers (+20,000) was partially offset by job losses in building material and garden equipment and supplies dealers (-10,000) and in automotive parts, accessories, and tire retailers (-3,000).
• Employment showed little or no change over the month in other major industries, including mining, quarrying, and oil and gas extraction; manufacturing; wholesale trade; transportation and warehousing; information; financial activities; and professional and business services.

The establishment survey also showed that average hourly pay for all employees rose by 12 cents an hour to $34.69 an hour in March, after it had increased by 5 cents an hour in February; at the same time, the average hourly earnings of production and non-supervisory employees increased by 7 cents to $29.79 an hour…employers also reported that the average workweek for all private payroll employees increased by 0.1 hour to 34.4 hours in March, after a 0.1 hour decrease in February, while hours for production and non-supervisory personnel was up by 0.1 hour to 33.9 hours….meanwhile, the manufacturing workweek was unchanged at 40.0 hours, while average factory overtime was down a tenth of an hour to 2.9 hours…

At the same time, the March household survey indicated that the seasonally adjusted extrapolation of those who reported being employed rose by an estimated 498,000 to 161,466,000, while the similarly estimated number of those counted as unemployed fell by 29,000 to 6,429,000; which together meant there was a 469,000 increase in the total labor force…since the working age population had grown by 173,000 over the same period, that meant the number of employment aged individuals who were not in the labor force fell by a rounded 296,000 to 99,989,000…meanwhile, the increase of those in the labor force was large enough, when compared to the civilian noninstitutional population, to increase the labor force participation rate from 62.5% in February to 62.7% in March….likewise, the increase in number employed as a percentage of the increase in the population was enough to raise the employment to population ratio, which we could think of as an employment rate, by 0.2%, from 60.1% in February to 60.3% in March….at the same time, the modest decrease in the number unemployed, combined with the increase in the labor force, was apparently just large enough to lower the unemployment rate by 0.1%, from 3.9% in February to 3.8% in March….meanwhile, the number who reported they were involuntarily working part time fell by 68,000 to 4,308,000 in March, even though the alternative measure of unemployment, U-6, which includes those “employed part time for economic reasons”, remained unchanged at 7.3% in March..

Like most reports from the Bureau of Labor Statistics, the employment situation press release itself is easy to read and understand, so you can get more details on these two reports from there…note that almost every paragraph in that release points to one or more of the tables that are linked to on the bottom of the release, and those tables are also on a separate html page here that you can open it alongside the press release to avoid the need to scroll up and down the page..

Hiring, Layoffs, and Job Quitting were Higher in February; Job Openings were Little Changed

The Job Openings and Labor Turnover Survey (JOLTS) report for February from the Bureau of Labor Statistics estimated that seasonally adjusted job openings increased by 8,000, from 8,748,000 in January to 8,756,000 in February, after January’s job openings were revised down by 115,000 from the originally reported 8,863,000…February’s jobs openings were still 11.1% lower than the 9,849,000 job openings reported for February a year ago, as the job opening ratio expressed as a percentage of the employed was unchanged at 5.3% in February, but was down from the 6.0% rate of February a year ago… the information sector, with a 85,000 job opening decrease to 117,000 openings, saw the largest percentage decrease, while job openings in finance and insurance increased by 126,000 to 491,000 (details on job openings by industry and region can be viewed in Table 1)…like most BLS releases, the press release for this report is easy to understand and also refers us to the associated table for the data cited, which are linked at the end of the release…

The JOLTS release also reports on labor turnover, which consists of hires and job separations, which in turn is further divided into layoffs and discharges, those who quit, and ‘other separations’, which includes retirements and deaths….in February, seasonally adjusted new hires totaled 5,818,000, up by 120,000 from the revised 5,698,000 who were hired or rehired in January, as the hiring rate as a percentage of all employed rose from 3.6% in January to 3.7% in February, but was still down from the 3.9% hiring rate in February a year earlier (details of hiring by sector since November and for a year ago are in table 2)….meanwhile, total separations rose by 110,000, from 5,449,000 in January to 5,559,000 in February, as the separations rate as a percentage of the employed was unchanged at 3.5% in February, but was down from the 3.8% separations rate in February a year ago (see details in table 3)…subtracting the 5,559,000 total separations from the total hires of 5,818,000 would imply an increase of 259,000 jobs in February, a bit less than the revised payroll job increase of 270,000 for February reported in the March establishment survey later in the week, but still well within the expected +/-130,000 margin of error for these extrapolated reports…

Breaking down the seasonally adjusted job separations, the BLS found that 3,484,000 of us voluntarily quit our jobs in February, up by 38,000 from the revised 3,446,000 who quit their jobs in January, while the quits rate, widely watched as an indicator of worker confidence, remained unchanged at 2.2% of total employment, while it was down from the quits rate of 2.6% year earlier (see details in table 4)….in addition to those who quit, another 1,724,000 were either laid off, fired or otherwise discharged in February, up by 128,000 from the revised 1,596,000 who were discharged in January, as the discharges rate rose from 1.0% to 1.1% of all those who were employed during the month, and it was also up from the 1.0% discharges rate of a year earlier….meanwhile, other separations, which includes retirements and deaths, were at 351,000 in February, down from 407,000 in January, for an ‘other separations rate’ of 0.2%, down from the 0.3% rate in January, but the same as in February of last year….both seasonally adjusted and unadjusted details by industry and by region on hires and job separations, and on job quits and discharges can be accessed using the links to tables at the bottom of the press release…

US Trade Deficit Rose 1.9% in February on Higher Imports of Cellphones

Our trade deficit rose 1.9% in February, as both the value of our exports and the value of our imports increased, but the value of our imports increased by more than the value of our exports did….the Commerce Department report on our international trade in goods and services for February indicated that our seasonally adjusted goods and services trade deficit rose by a rounded $1.3 billion to a rounded $68.9 billion in February, from a January deficit that was revised up to $67.6 billion from the $67.4 billion reported a month ago…in rounded figures, the value of our February exports rose by a rounded $5.9 billion to $251.2 billion on a $5.0 billion increase to $176.7 billion in our exports of goods, and an $0.8 billion increase to $86.4 billion in our exports of services, while the value of our imports rose $7.1 billion to $331.9 billion on a $4.7 billion increase to $268.1 billion in our imports of goods, and a $2.4 billion increase to $63.8 billion in our imports of services….export prices averaged 0.3% higher in February, which means part of the increase in the nominal value of our exports for the month was price related, and that our real exports likely rose on the order of 2.0%, while import prices also averaged 0.8% higher, meaning that part of increase in imports was also price related, and that real imports probably only rose about 1.4%

The $5.0 billion increase in the value of our February exports of goods resulted from higher exports of industrial supplies and materials, of foods, feeds, and beverages, and of capital goods, which were partly offset by lower exports of automotive products…referencing the Full Release and Tables for February (pdf), in Exhibit 7 we find that our exports of industrial supplies and materials rose by $2,923 million to $64,073 million on a $1,097 million increase in our exports of crude oil, a $600 million increase in our exports of non-monetary gold, and a $432 million increase in our exports of natural gas liquids, which were partly offset by a $552 million decrease in our exports of natural gas, and that our exports of foods, feeds and beverages rose by $1,706 million to $15,471 million, led by a $989 million increase in our exports of soybeans… in addition, our exports of capital goods rose by $1,480 million to $52,969 million on a $1,420 million increase in our exports of civilian aircraft and a $337 million increase in our exports of computers, which were partly offset by a $529 million decrease in our exports of industrial machinery not otherwise itemized, and our exports of consumer goods rose by $148 million to $21,750 million as a $663 million decrease in our exports of pharmaceutical preparations was offset by a $553 million increase in our exports of gem diamonds, while our exports in other goods not categorized by end use rose by $40 million to $7,188 million…partly offsetting the increases in those end use categories, our exports of automotive vehicles, parts, and engines fell by $1,287 million to $13,853 million, led by a $866 million decrease in our exports of new and used passenger cars..

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our imports of goods and shows that higher imports of consumer goods, of foods, feeds, and beverages, and of automotive products were largely responsible for the $4.7 billion increase in our February goods imports, even as imports in all categories rose….our imports of consumer goods increased by $1,605 million to $63,751 million as a $1,350 million increase in our imports of a cell phones, a $430 million increase in our imports of furniture and related household goods, and a $381 million increase in our imports of textile apparel and household goods other than those of wool or cotton were partly offset by a $1,256 million decrease in our imports of pharmaceutical preparations, and a $364 million decrease in our imports of artwork and other collectibles. while our imports of foods, feeds, and beverages rose by $1300 million to $18,283 million, on increases in imports of every food category, led by a $539 million increase in imports of foods other than those itemized separately….in addition, our imports of automotive vehicles, parts and engines rose by $1,066 million to $41,946 million on a $467 million increase in our imports of automotive parts and accessories other than engines, chassis, and tires, and our imports of capital goods rose by $679 million to $75,685 million as a $1,611 million increase in our imports of computers and a $394 million increase in our imports of telecommunications equipment were partly offset by a $534 million decrease in our imports of computer accessories and a $532 million decrease in our imports of semiconductors…lastly, our imports of industrial supplies and materials rose by $128 million to $55,077 million as a $572 million increase in our imports of petroleum products other than fuel oil and a $308 million increase in our imports of bauxite and aluminum were partly offset by a $512 million decrease in our imports of organic chemicals and a $420 million decrease in our imports of copper, while our imports of other goods not categorized by end use fell by $18 million to $10,867 million…

The press release for this month’s report summarizes Exhibit 19 in the full release pdf for February, which gives us surplus and deficit details on our goods trade with selected countries:

The February figures show surpluses, in billions of dollars, with South and Central America ($5.5), Netherlands ($4.3), Hong Kong ($2.8), Australia ($1.6), United Kingdom ($0.8), Belgium ($0.6), Brazil ($0.6), Switzerland ($0.4), and Saudi Arabia (less than $0.1). Deficits were recorded, in billions of dollars, with China ($21.9), European Union ($17.6), Mexico ($15.3), Vietnam ($9.6), Germany ($7.6), Japan ($6.2), Ireland ($5.3), South Korea ($5.2), Canada ($5.1), India ($4.4), Taiwan ($4.2), Italy ($3.4), Malaysia ($2.4), France ($0.8), Singapore ($0.3), and Israel ($0.3).

• The balance with Switzerland shifted from a deficit of $1.5 billion in January to a surplus of $0.4 billion in February. Exports increased $0.7 billion to $3.6 billion and imports decreased $1.2 billion to $3.2 billion.
• The deficit with Japan decreased $1.1 billion to $6.2 billion in February. Exports increased $0.1 billion to $6.4 billion and imports decreased $1.0 billion to $12.6 billion.
• The deficit with Mexico increased $2.7 billion to $15.3 billion in February. Exports increased $0.4 billion to $27.6 billion and imports increased $3.1 billion to $43.0 billion.

To gauge the impact of January and February trade data on the eventual 1st quarter GDP growth figures, we use exhibit 10 in the full pdf for this report, which gives us monthly goods trade figures by end use category and in total, already adjusted for inflation in chained 2017 dollars, the same inflation adjustment that’s used by the BEA to compute trade figures for GDP, with the only difference being that the amounts in this report are not annualized….from that table, we can figure that the 4th quarter’s real exports of goods averaged 143,572.7 million monthly in chained 2017 dollars, while inflation adjusted 1st quarter goods exports were at 144,853 million and 147,842 million for January and February respectively in that same 2017 dollar quantity index representation…averaging January’s and February’s goods exports and then computing the annualized change between that average and the average of the fourth quarter, we find that the 1st quarter’s real exports of goods are running at a 7.96% annual rate above those of the 4th quarter, or at a pace that would add about 0.58 percentage points to 1st quarter GDP….. in a similar manner, we find that our 4th quarter real imports of goods averaged 227,978.3 million monthly in chained 2017 dollars, while inflation adjusted January and February imports were at 230,845 million and 234,855 million respectively, after that same 2017 chained dollars inflation adjustment…that would indicate that so far in the 1st quarter, our real imports of goods have increased at a 8.83% annual rate from those of the 4th quarter…since increases in imports subtract from GDP because they represent the portion of consumption or investment that occurred during the quarter that was not produced domestically, their increase at a 8.83% rate would subtract about 0.96 percentage points from 1st quarter GDP….hence, if the average trade deficit in goods of the two months reported here is continued in March, the net effect of our international trade in goods will be to subtract around 0.38 percentage points from 1st quarter GDP…

Note that we have not computed the impact of the usually less volatile change in services here because the Census does not provide inflation adjusted data on those, but that the $0.6 billion increase in exports of services vs the $2.4 billion increase in imports of services suggests that February’s trade in services would also be a subtraction from 1st quarter GDP, after a near balance in the change in January’s exports and imports in services suggested that the impact of that month’s services trade on GDP would be negligible…

Construction Spending Fell 0.3% in February after January & December Figures Were Revised Lower

The Census Bureau’s report on February construction spending (pdf) reported that “Construction spending during February 2024 was estimated at a seasonally adjusted annual rate of $2,091.5 billion, 0.3 percent (±0.8 percent)* below the revised January estimate of $2,096.9 billion. The February figure is 10.7 percent (±1.3 percent) above the February 2023 estimate of $1,889.6 billion. During the first two months of this year, construction spending amounted to $298.1 billion, 11.9 percent (±1.3 percent) above the $266.5 billion for the same period in 2023. “…the January annualized spending estimate was revised less than 0.3% lower, from the $2,102.4 billion reported a month ago to $2,096.9 billion, while December’s construction spending was revised down by more than 0.2%, from $2,105.8 billion to $2,101.042 billion annually, which together meant that the December to January construction spending change remained as a decrease of 0.2%….meanwhile, December’s annualized spending decrease would mean we’ll see a downward revision of about 1 basis point to 4th quarter GDP when the annual revisions are released later this summer…

A further breakdown of the different subsets of construction spending are provided by a Census summary, which precedes the detailed spreadsheets, is included below:

• Private Construction – Spending on private construction was at a seasonally adjusted annual rate of $1,617.1 billion, virtually unchanged from (±0.7 percent)* the revised January estimate of $1,616.8 billion. Residential construction was at a seasonally adjusted annual rate of $901.1 billion in February, 0.7 percent (±1.3 percent)* above the revised January estimate of $894.5 billion. Nonresidential construction was at a seasonally adjusted annual rate of $716.0 billion in February, 0.9 percent (±0.7 percent) below the revised January estimate of $722.3 billion.
• Public Construction – In February, the estimated seasonally adjusted annual rate of public construction spending was $474.4 billion, 1.2 percent (±1.5 percent)* below the revised January estimate of $480.1 billion. Educational construction was at a seasonally adjusted annual rate of $100.5 billion, 1.8 percent (±2.0 percent)* below the revised January estimate of $102.3 billion. Highway construction was at a seasonally adjusted annual rate of $147.3 billion, 1.6 percent (±4.8 percent)* below the revised January estimate of $149.7 billion.

As you can gather from that summary, construction spending data is used as the source for 3 subcomponents of GDP; investment in private non-residential structures, investment in residential structures, and into government investment outlays, for both state and local and Federal governments…however, getting an accurate read on the impact of February’s construction spending reported in this release on 1st quarter GDP is difficult because all figures given here are in nominal dollars and as you know, data used to compute the change in GDP must be adjusted for changes in price to determine the actual change in construction put in place….there are multiple prices indexes for different types of construction listed in the National Income and Product Accounts Handbook, Chapter 6 (pdf), so in lieu of trying to adjust the figures for all of those types of construction separately, we’ve opted to just use the producer price index for final demand construction as an inexact shortcut to make the needed price adjustment and come up with an approximate estimate…

That price index showed that aggregate construction costs were unchanged in February, after they had increased by 0.2% in January, and were unchanged in December and fell by 0.1% in November…on that basis, we can estimate that February construction costs were about 0.2% more than those of December, also 0.2% more than those of November, and roughly 0.1% more than those of October, and of course roughly the same as those of January….we’ll then use those relative price change percentages to inflate the lower cost spending figures for each of the 4th quarter months vis a vis February, which is arithmetically the same as adjusting higher priced January and February construction spending downward, for purposes of comparison…

This report gives annualized construction spending in millions of dollars for the 4th quarter months as $2,101,042 in December, $2,082,923 in November, and $2,058,903 in October, while annualized construction spending was at $2,091,511 in February and $2,096,922 in January….thus to compare January’s nominal construction spending of $2,096,922 and February’s figure of $2,091,511 to “inflation adjusted” figures of the fourth quarter, our computation looks like this: ((2,091,511 + 2,096,922 * 1.000 ) / 2 ) / ((2,101,042 * 1.002 + 2,082,923 * 1.002 + 2,058,903 * 1.001) / 3) = 1.00469427, which tells us that real construction spending over January and February has risen by 0.47% from that of the 4th quarter period, or that it was up at a 1.89% annual rate…then, to figure the potential effect of that change on GDP, we take the difference between the 4th quarter inflation adjusted average and that of January’s & February’s adjusted spending as a fraction of 4th quarter GDP, and find that 1st quarter construction spending is rising at a rate that would add about 0.09 percentage points to 1st quarter GDP, an estimate which assumes there would be little change in real construction in March over the January & February average…

February Factory Shipments Rose 1.4%, Factory Inventories were 0.3% Higher

The Full Report on Manufacturers’ Shipments, Inventories, & Orders (pdf) for February from the Census Bureau reported that the seasonally adjusted value of new orders for manufactured goods increased by $8.2 billion or 1.4 percent to $576.8 billion, the first increase in three months, following a revised 3.8% decrease to $568.6 billion in January, which was originally reported as a 3.6 percent decrease to $569.7 billion a month ago….however, since the Census Bureau does not even collect data on new orders for non durable goods for this widely watched “factory orders report”, both the “new orders” and “unfilled orders” sections of this report are really only accurate as revised updates to the February advance report on durable goods, which was released last week…on those durable goods revisions, the Census Bureau’s own summary, which precedes their detailed spreadsheet of the metrics included in this report, is quite clear and complete, so we’ll just quote directly from that summary here:

• Summary: New orders for manufactured goods in February, up following two consecutive monthly decreases, increased $8.2 billion or 1.4 percent to $576.8 billion, the U.S. Census Bureau reported today. This followed a 3.8 percent January decrease. Shipments, also up following two consecutive monthly decreases, increased $8.0 billion or 1.4 percent to $581.6 billion. This followed a 0.8 percent January decrease. Unfilled orders, up eleven of the last twelve months, increased $0.1 billion or virtually unchanged to $1,392.8 billion. This followed a virtually unchanged January decrease. The unfilled orders to-shipments ratio was 7.10, down from 7.17 in January. Inventories, up following two consecutive monthly decreases, increased $2.3 billion or 0.3 percent to $857.7 billion. This followed a 0.1 percent January decrease. The inventories-to-shipments ratio was 1.47, down from 1.49 in January.
• New orders for manufactured durable goods in February, up following two consecutive monthly decreases, increased $3.5 billion or 1.3 percent to $277.7 billion, down from the previously published 1.4 percent increase. This followed a 6.9 percent January decrease. Transportation equipment, also up following two consecutive monthly decreases, led the increase, $2.9 billion or 3.3 percent to $90.4 billion. New orders for manufactured nondurable goods increased $4.7 billion or 1.6 percent to $299.0 billion.
• Shipments of manufactured durable goods in February, up following two consecutive monthly decreases, increased $3.3 billion or 1.2 percent to $282.6 billion, unchanged from the previously published increase. This followed a 0.7 percent January decrease. Transportation equipment, also up following two consecutive monthly decreases, drove the increase, $3.5 billion or 4.0 percent to $89.8 billion. Shipments of manufactured nondurable goods, up following four consecutive monthly decreases, increased $4.7 billion or 1.6 percent to $299.0 billion. This followed a 0.8 percent January decrease. Petroleum and coal products, also up following four consecutive monthly decreases, led the increase, $4.0 billion or 6.3 percent to $67.8 billion.
• Unfilled orders for manufactured durable goods in February, up eleven of the last twelve months, increased $0.1 billion or virtually unchanged to $1,392.8 billion, unchanged from the previously published increase. This followed a virtually unchanged January decrease. Transportation equipment, up fourteen of the last fifteen months, drove the increase, $0.6 billion or 0.1 percent to $898.0 billion.
• Inventories of manufactured durable goods in February, up seven consecutive months, increased $1.7 billion or 0.3 percent to $528.7 billion, unchanged from the previously published increase. This followed a 0.1 percent January increase. Transportation equipment, also up seven consecutive months, led the increase, $1.2 billion or 0.7 percent to $170.1 billion. Inventories of manufactured nondurable goods, up following four consecutive monthly decreases, increased $0.6 billion or 0.2 percent to $329.1 billion. This followed a 0.6 percent January decrease. Petroleum and coal products, also up following four consecutive monthly decreases, led the increase, $0.4 billion or 0.9 percent to $47.7 billion. By stage of fabrication, February materials and supplies increased 0.2 percent in durable goods and decreased 0.8 percent in nondurable goods.

To gauge the effect of February’s dollar valued factory inventories on 1st quarter GDP, they must first be adjusted for changes in price with appropriate components of the producer price index….by stage of fabrication, the value of finished goods inventories increased 0.3% to $297,937 million; the value of work in process inventories increased 0.7% to $247,477 million, and the value of materials and supplies inventories decreased by 0.2% to $312,320 million…at the same time, the producer price index for February indicated that prices for finished goods increased 1.2%, that prices for intermediate processed goods were 1.6% higher, and that prices for unprocessed goods were on average 1.2% higher, even as core raw materials averaged a 1.9% price decrease….assuming similar valuations for like inventories, that would suggest that February’s real finished goods inventories were around 0.9% smaller than January’s, that real inventories of intermediate processed goods were also about 0.9% smaller, and that real raw material inventory inventories were likely about 1.4% lower, with a caveat that crude oil prices are overweighed in the PPI when compared to their 5% of factory inventories …since this report thus indicates a decrease of about 1.1% in real factory inventories, following a 0.2% decrease in January, and since there was a modest increase in real factory inventories in the 4th quarter, any 1st quarter decrease in real factory inventories would first subtract that 4th quarter increase and then also the first quarter decrease from the growth rate of first quarter GDP…

(the above is the synopsis that accompanied my regular sunday morning news links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most of which are picked from the aforementioned GGO posts, contact me…)

US oil prices rose every day this week and ended at a new five month high ​o​n ​threats to supply from increasing hostilities in eastern Europe and the Mideast….after rising 3.2% to a 5 month high of $83.17 a barrel last week on stronger than expected US economic data and ​on expectations that OPEC would leave its production cuts in place, the contract price for the benchmark US light sweet crude for May delivery rallied almost 2% early Monday on expectations of increas​ed oil demand following the release of supportive economic news from the U.S. and China, but reversed part of those early gains to settle 54 cent higher at $83.71 a barrel as traders figured that stronger US manufacturing data would reduce the chances of a meaningful Fed rate cut​…oil prices continued on their upward trend on Tuesday amid a new wave of attacks on Russian and Ukrainian energy facilities, and escalating tensions in the Middle East, and settled $1.44 cents higher at a new 5 month high of $85.15 a barrel after Iran vowed to take revenge on Israel for an airstrike that killed two top generals at the Iranian embassy compound in Damascus, raising the specter of a broader war…oil prices edged higher early Wednesday after OPEC+ ministers affirmed the current supply cuts would continue and after the American Petroleum Institute reported across the board draws from oil & product supplies, then pulled back after the EIA reported a surprise crude inventory build, but still settled the session 28 cents higher at another 5 month high of $85.43 a barrel as trader concerns about supply disruptions due to conflict in the Middle East offset the bearish jump in U.S. crude oil inventories…oil prices fell on the EIA’s report of sluggish US fuel demand in early Asian trading Thursday, then moved mostly sideways for much of the US session as they slipped back below the $85 level as caution over US jobs data and interest rates weighed against OPEC’s output cuts and geopolitical tensions, but rallied late in the afternoon session to close $1.16 higher at another 5 month high of $86.59 a barrel on news that Israeli embassies across the U.S. had been placed on high alert due to increasing threats of an Iranian attack on Israeli diplomats….oil prices surged more than $1 a barrel in overseas markets on Friday as traders watched for a possible direct military conflict between Israel and Iran that could further tighten supplies, but pared those early gains to settle up 32 cents at a 24 week high of $86.91 a barrel as better than expected ​US jobs ​d​ata w​as bullish for oil demand but potentially bearish for interest rate cuts by the Fed later this year, and thus finished 4.5% higher on the week…

natural gas prices rose for the 2nd time in three weeks, or for the first time in four weeks, depending on whether one counts a switch to quoting a higher priced contract as a rise in prices, as Reuters and most of the media does, or not, as we would favor…after falling 2.7% to $1.763 per mmBTU while natural gas quotes were 6.3% higher on the switch from the April contract last week, the contract price for natural gas for May delivery opened nearly six cents higher on Monday and rose all morning, as analysts pointed to lower production as the impetus for the ​e​arly rally, but slipped in afternoon trading to settle 7.4 cents higher at a three-week high of $1.837 per mmBTU, as gas well output dropped and forecasts were lifted for demand next week…but natural gas prices opened 5 cents lower on Tuesday, knocked back down overnight by weakening LNG exports and weak heating demand, and fell to the day’s low of $1.778 within minutes, before mounting a steady advance to settle 2.5 cents higher at another three week high of $1.862 per mmBTU, as producers continued to cut output, even as price gains were limited by lowered forecasts for demand this week…while natural gas prices opened 3 cents higher on Wednesday, prices soon backed off, as declines in production could no longer buoy a market with such saturated storage levels, and ​May natural gas settled 2.1 cents lower at $1.841 per mmBTU as the reported decline in output was less than traders had been expecting…the May contract then traded sideways near $1.835 leading up ​t​o the weekly storage report release on Thursday, then moved lower as the report hit the wire, as updated forecasts for reduced heating demand in the coming weeks added to the market’s existing bearish sentiment, and settled 6.7 cents lower at $1.774 per mmBTU, after the EIA’s storage report confirmed lofty supply levels…natural gas prices clawed back some of their losses in early trading Friday, as traders continued to mull a mix of restrained production, mild weather and plump inventories, but a serious rally could not be sustained and gas settled 1.1 cents higher at $1.785 per mmBTU, but still managed to eke out a 1.2% gain on the week…

The EIA’s natural gas storage report for the week ending March 29th indicated that the amount of working natural gas held in underground storage fell by 37 billion cubic feet to 2,259 billion cubic feet by the end of the week, which left our natural gas supplies 422 billion cubic feet, or 23.0% above the 1837 billion cubic feet that were in storage on March 29th of last year, and 633 billion cubic feet, or 38.9% more than the five-year average of 1,626 billion cubic feet of natural gas that were typically in working storage as of the 29th of March over the most recent five years…the 37 billion cubic foot withdrawal from US natural gas working storage for the cited week was less than the 41 billion cubic foot withdrawal that the market was expecting, while it was more than the 29 billion cubic feet that were pulled from natural gas storage during the corresponding third week of March 2023, and was quite a bit more than the average 1 billion cubic foot withdrawal from natural gas storage that has been typical for the same last week of March over the past 5 years…

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending March 29th indicated that ​after small decreases in our oil exports​ and ​in our refinery throughput, we again had surplus oil to add to our stored commercial crude supplies for 8th time in ten weeks and for the 16th time in the past 24 weeks, as even the oil supplies that the EIA could not account for we​re little changed….Our imports of crude oil fell by an average of 85,000 barrels per day to an average of 6,618,000 barrels per day, after rising by an average of 424,000 barrels per day over the prior week, while our exports of crude oil fell by 159,000 barrels per day to average 4,022,000 barrels per day, which when used to offset our imports, meant that the net of our trade in oil worked out to a net import average of 2,596,000 barrels of oil per day during the week ending March 29th, 74,000 more barrels per day than the net of our imports minus our exports during the prior week. At the same time, transfers to our oil supply from Alaskan gas liquids, from natural gasoline, from condensate, and from unfinished oils averaged 384,000 barrels per day, while during the same week, production of crude from US wells was unchanged at 13,100,000 barrels per day. Hence our daily supply of oil from the net of our international trade in oil, from transfers, and from domestic well production appears to have averaged a rounded total of 16,080,000 barrels per day during the March 29th reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,897,000 barrels of crude per day during the week ending March 29th, an average of 35,000 fewer barrels per day than the amount of oil that our refineries reported they were processing during the prior week, while over the same period the EIA’s surveys indicated that a rounded average of 543,000 barrels of oil per day were being added to the supplies of oil stored in the US… So, based on that reported & estimated data, the crude oil figures provided by the EIA for the week ending March 29th appear to indicate that our total working supply of oil from net imports, from transfers, and from oilfield production was 360,000 barrels per day less than what what was added to storage plus our oil refineries reported they used during the week…To account for that difference between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a +360,000] barrel per day figure onto line 16 of the weekly U.S. Petroleum Balance Sheet, in order to make the reported data for the supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there was an error or omission of that magnitude in the week’s oil supply & demand figures that we have just transcribed…Even so, since most oil traders react to these weekly EIA reports as if they were accurate, and since these weekly figures therefore often drive oil pricing, and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it’s published, and just as it’s watched & believed to be reasonably reliable by most everyone in the industry…(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….(note there is also an aging twitter thread from an EIA administrator addressing these ongoing weekly errors, and what they had hoped to do about it)

This week’s average 543,000 barrel per day increase in our overall crude oil inventories came as an average of 459,000 barrels per day were being added to our commercially available stocks of crude oil, while an average of 84,000 barrels per day were being added to our Strategic Petroleum Reserve, the seventeenth SPR increase in twenty-four weeks, following nearly continuous withdrawals over the prior 39 months… Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to 2,272,000 barrels per day last week, which was 0.9% more than the 6,214,000 barrel per day average that we were importing over the same four-week period last year. This week’s crude oil production was reported to be unchanged at 13,100,000 barrels per day because the EIA’s rounded estimate of the output from wells in the lower 48 states was unchanged at 12,700,000 barrels per day, while Alaska’s oil production was also unchanged at 432,000 barrels per day and added the same 400,000 barrels per day to the EIA’s rounded national total as it did last week…US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure matches that of our pre-pandemic production peak, and is also 35.1% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021.

US oil refineries were operating at 88.6% of their capacity while processing those 15,897,000 barrels of crude per day during the week ending March 29th, down from their 88.7% utilization rate of a week earlier, but ​a nearly normal operating rate for late March, after ​refineries recover​e​d from damage caused by the arctic cold that penetrated to the Gulf Coast in mid January… the 15,897,000 barrels of oil per day that were refined this week were 1.8% more than the 15,615,000 barrels of crude that were being processed daily during week ending March 31st of 2023, and 0.3% more than the 15,849,000 barrels that were being refined during the prepandemic week ending March 29th, 2019, when our refinery utilization rate was at a below normal 86.4%..

Even with the decrease in the amount of oil being refined this week, gasoline output from our refineries was quite a bit higher, increasing by 767,000 barrels per day to 9,980,000 barrels per day during the week ending March 29th, after our refineries’ gasoline output had decreased by 435,000 barrels per day during the prior week. This week’s gasoline production was 1.3% more than the 9,851,000 barrels of gasoline that were being produced daily over week ending March 31st of last year, and 1.7% more than the gasoline production of 9,813,000 barrels per day during the prepandemic week ending March 29th, 2019….on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 208,000 barrels per day to 4,606,000 barrels per day, after our distillates output had increased by 124,000 barrels per day during the prior week. Even after six production increases in the past 7 weeks, our distillates output was 2.8% less than the 4,740,000 barrels of distillates that were being produced daily during the week ending March 31st of 2023, and 5.4% less than the 4,870,000 barrels of distillates that were being produced daily during the week ending March 29th, 2019…

Even with this week’s increase in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the eighth time in nine weeks, decreasing by 4,256,000 barrels to 227,816,000 barrels during the week ending March 29th, after our gasoline inventories had increased by 1,299,000 barrels during the prior week. Our gasoline supplies fell this week because the amount of gasoline supplied to US users jumped by 521,000 barrels per day to 9,236,000 barrels per day, and because our exports of gasoline rose by 77,000 barrels per day to 863,000 barrels per day, and because our imports of gasoline fell by 34,000 barrels per day to 488,000 barrels per day.…​B​ut even after thirty-two gasoline inventory withdrawals over the past fifty-two weeks, our gasoline supplies were still 2.4% above last March 31st’s gasoline inventories of 222,575,000 barrels, but ​were about 3% below the five year average of our gasoline supplies for this time of the year…

With this week’s decrease in our distillates production, our supplies of distillate fuels fell for 8th time in ten weeks, following eight consecutive prior increases, decreasing by 1,268,000 barrels to 116,069,000 barrels over the week ending March 29th, after our distillates supplies had decreased by 1,185,000 barrels during the prior week. Our distillates supplies fell again this week even though the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 533,000 barrels per day to 3,495,000 barrels per day, because our exports of distillates rose by 276,000 barrels per day to 1,396,000 barrels per day, and because our imports of distillates fell by 61,000 barrels per day to 104,000 barrels per day…Even with 30 inventory decreases over the past fifty-two weeks, our distillates supplies at the end of the week were 2.7% above the 113,051,000 barrels of distillates that we had in storage on March 31st of 2023, but were about 7% below the five year average of our distillates inventories for this time of the year…

Finally, after supply and demand metrics for US oil were little changed this​ past week, our commercial supplies of crude oil in storage rose for the 17th time in twenty-six weeks and for the 24th time in the past year, increasing by 3,210,000 barrels over the week, from 448,207,000 barrels on March 22nd to 451,417,000 barrels on March 29th, after our commercial crude supplies had increased by 3,165,000 barrels over the prior week… With this week’s increase, our commercial crude oil inventories remained about 2% below the most recent five-year average of commercial oil supplies for this time of year, but were roughly 33% above the average of our available crude oil stocks as of the last weekend of March over the 5 years at the beginning of the past decade, with the big difference between those comparisons arising because it wasn’t until early 2015 that our oil inventories had first topped 400 million barrels. After our commercial crude oil inventories had jumped to record highs during the Covid lockdowns of the Spring of 2020, then jumped again after February 2021’s winter storm Uri froze off US Gulf Coast refining, but then fell in the wake of the Ukraine war, only to jump again following the Christmas 2022 refinery freeze offs, our commercial crude supplies as of this March 29th were still 3.9% less than the 469,952,000 barrels of oil left in commercial storage on March 31st of 2023, but 9.5% more than the 412,371,000 barrels of oil that we still had in storage on April 1st of 2022, while still 9.4% less than the 498,313,000 barrels of oil we had in commercial storage on April 2nd of 2021, after refinery damage from winter storm Uri left even more crude oil remaining after 2020’s pandemic precautions had left a lot of oil unused…

This Week’s Rig Count

In lieu of a detailed report on the rig count, we are again just including a screenshot of the rig count summary from Baker Hughes…note that since last week’s rig count was released a day early, ahead of the Good Friday holiday, this week’s report thus covers ​8 days…in the table below, the first column shows the active rig count as of April 5th, the second column shows the change in the number of working rigs between last week’s count (March 28th) and this week’s (April 5th) count, the third column shows last week’s March 28th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting period a year ago, which in this week’s case was the 7th of April, 2023…

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The key reports released this week were the 3rd estimate of 4th quarter GDP and the February report on Personal Income and Spending from the Bureau of Economic Analysis….in addition, the week also saw the advance report on durable goods for February and the February report on new home sales, both from the Census bureau, and the Chicago Fed National Activity Index (CFNAI) for February, a weighted composite index of 85 different economic metrics, which rose to +0.05 in February from –0.54 in January.…despite that February increase, the more widely watched 3 month average of the CFNAI decreased to –0.18 in February from –0.11 in January, which indicates that national economic activity has been below the historical trend over recent months, as would any negative reading…

this week also saw the last three regional Fed manufacturing surveys for March…the Richmond Fed Survey of Manufacturing Activity, covering an area that includes Virginia, Maryland, the Carolinas, the District of Columbia and West Virginia, reported its broadest composite index fell from −5 in February to −11 in March, indicating that a larger plurality of that region’s manufactures saw deteriorating conditions than a month earlier….meanwhile, the Kansas City Fed manufacturing survey for March, covering western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, reported its broadest composite index came in at -7 in March, down from -4 in February, but up slightly from -9 in January, but also indicating that a larger plurality of that region’s manufactures saw deteriorating conditions than a month earlier……at the same time, the Dallas Fed Texas Manufacturing Outlook Survey, covering Texas and adjacent counties in northwest Louisiana and southeast New Mexico, reported their general business activity composite index fell to -14.4 from last month’s –11.3, thus also indicating a more widespread deterioration of the Texas area economy than in February…

the week’s major private release was the widely watched Case-Shiller Home Price Index for January from S&P Case-Shiller, which indicated that home prices during November, December and January averaged 6.0% higher nationally than prices for the same homes that sold during the same 3 month period a year earlier, which was up from the 5.5% year over year increase that was reported a month ago for the months of October, November and December…note that Case-Shiller seasonally adjusts its indices, so the monthly change in the index doesn’t necessarily represent the actual monthly change in prices for homes..

4th Quarter GDP Grew at a 3.4% Rate, Revised from 3.2%, as PCE Services and Fixed investment were Revised Higher

The Third Estimate of our 4th Quarter GDP from the Bureau of Economic Analysis indicated that our real output of goods and services grew at a 3.4% rate in the quarter, revised from the 3.2% growth rate reported in the second estimate last month, as upward revisions to personal consumption expenditures for services and to fixed investment more than offset downward revisions to inventories and exports…in current dollars, our fourth quarter GDP grew at a 5.12% annual rate, increasing from what would work out to be a $27,610.1 billion a year rate in the 3rd quarter to a $27,957.0 annual rate in the 4th quarter, with the headline 3.4% annualized rate of increase in real output arrived at after weighted annualized inflation adjustments averaging 1.6%, known in aggregate as the GDP deflator, were computed from the price changes of each of the GDP components and applied to their current dollar change…

Remember that the GDP press release reports all quarter over quarter percentage changes at an annual rate, which means that they’re expressed as a change a bit over 4 times of that what actually occurred over the 3 month period, and that the prefix “real” is used to indicate that each change has been adjusted for inflation using price changes chained from 2017, and then that all percentage changes in this report are calculated from those 2017 dollar figures, which would be better thought of as a quantity indexes than as any reality based dollar amounts….for our purposes, all the data that we’ll use in reporting the changes here comes directly from the pdf for the 3rd estimate of 4th quarter GDP, which can be accessed directly on the BEA’s GDP landing page, which also includes links to the tables on Excel and other technical notes about this release…specifically, we reference table 1, which shows the real percentage change in each of the GDP components annually and quarterly since the 1st quarter of 2020; table 2, which shows the contribution of each of the components to the GDP figures for those quarters and years; table 3, which shows both the current dollar value and inflation adjusted value of each of the GDP components; and table 4, which shows the change in the price indexes for each of the components…the pdf for the 4th quarter second estimate, which this estimate revises, is here…

Growth of real personal consumption expenditures (PCE), the largest component of GDP, was revised from a growth rate of 3.0% to an overall 3.3% growth rate in this 3rd estimate…that growth rate figure was arrived at by deflating components of the 5.12% growth rate in the dollar amount of consumer spending with components of the PCE price index, which indicated inflation of goods and services bought by individuals increased at a 1.8% annual rate in the 4th quarter, which was unrevised from the PCE inflation rate reported a month ago….

Real consumption of durable goods grew at a 3.2% annual rate, statistically unrevised from growth rate shown in the advance report, and added 0.25 percentage points to GDP, as real consumption of recreational goods and vehicles grew at an 7.5% rate and accounted for more than 80% of the durable goods growth, and also offset a small decrease in real consumption of automobiles….at the same time, real consumption of nondurable goods by individuals grew at a 2.9% annual rate, revised from the 3.3% growth rate reported in the 2nd estimate, and added 0.41 percentage points to the 4th quarter’s economic growth rate, as growth in real consumption of groceries, clothing and footwear, and other non-durable goods contributed, offsetting a small decrease in real consumption of gasoline…..meanwhile, consumption of services grew at a 3.4% annual rate, revised from the 2.8% growth rate reported last month, and added 1.55 percentage points to the final GDP tally, as real health care services grew at a 7.8% rate and accounted for more than half of the 4th quarter services growth…

Meanwhile, seasonally adjusted real gross private domestic investment grew at a 0.7% annual rate in the 4th quarter, revised down from the 0.9% growth estimate reported last month, as real private fixed investment grew at a 3.5% rate, revised up from the 2.5% growth rate reported in the second estimate, but inventory growth shrunk more than was previously estimated… Real investment in non-residential structures are now shown to have grown at a 10.9% rate, revised up from the 7.5% growth rate previously reported, while real investment in equipment shrunk at 1.1% rate, revised up from the 1.7% contraction rate shown a month ago…meanwhile, the quarter’s investment in intellectual property products was revised up from a 3.3% growth rate to a 3.4% rate, while at the same time real residential investment was shown to be growing at a 2.8% annual rate, down a bit from the 2.9% growth rate shown in the previous report….after those revisions, the increase in investment in non-residential structures added 0.32 percentage points to the 4th quarter’s growth rate, while the decrease in investment in equipment subtracted 0.05 percentage points from the quarter’s growth rate, and growth in investment in intellectual property added 0.23 percentage points to the growth rate of 4th quarter GDP, while the increase in residential investment added 0.11 percentage points to the growth rate of GDP…..for an easy to read table as to what’s included in each of those GDP investment categories, see the NIPA Handbook, Chapter 6, page 3….

At the same time, growth in real private inventories was revised from the previously reported $66.3 billion in inflation adjusted growth to show that inventories grew at an inflation adjusted $54.9 billion rate…since that came after inventories had grown at an inflation adjusted $77.8 billion rate in the 3rd quarter, the change in real inventory growth from the 3rd to the 4th quarter was revised from a rounded $11.4 billion negative change to a $22.9 billion negative change, and hence subtracted 0.47 percentage points from the 4th quarter’s growth rate, revised from the 0.27 percentage point subtraction from GDP due inventory growth shrinkage reported in the second estimate…. however, since lower growth of inventories indicates that less of the goods produced during the quarter were left in a warehouse or sitting on the shelf, their decrease at a $22.9 billion rate indicates that real final sales of GDP were actually greater by that amount, and hence real final sales of GDP grew at a 3.9% rate in the 4th quarter, revised from the real final sales 3.5% growth rate shown in the second estimate, and above the real final sales growth rate of 3.6% in the 3rd quarter, when higher inventory growth was a major factor the quarter’s overall 4.9% GDP growth rate…

The previously reported increase in real exports was revised lower with this estimate, while the previously reported increase in real imports was revised lower by somewhat less, and as a result our net trade improvement was a smaller addition to GDP growth than previously reported…our real exports grew at a 5.1% rate, revised from the 6.4% rate reported in the second estimate, and since exports are added to GDP because they are part of our production that was not consumed or added to investment in our country and hence not captured by another GDP metric, that increase in 4th quarter exports added 0.55 percentage points to the 4th quarter’s GDP growth rate, revised from the 0.69 percentage point addition to GDP due to higher exports shown in the 2nd estimate….meanwhile, the previously reported 2.7% increase in our real imports was revised to a 2.2% increase, and since imports are subtracted from GDP because they represent either consumption or investment that was added to another GDP component that shouldn’t have been because it was not produced domestically, their increase subtracted 0.30 percentage points from 4th quarter GDP, revised from the 0.37 percentage point subtraction shown last month… thus, our improving trade imbalance added a net 0.25 percentage points to 4th quarter GDP, revised from the 0.32 percentage point addition that had been indicated by the second estimate..

Finally, there were also upward revisions to government consumption and investment in this 3rd estimate, as the overall government sector grew at a 4.6% rate, revised from the 4.2% growth rate show a month ago….real federal government consumption and investment was seen to have grown at a 2.4% rate from the 4th quarter in this estimate, revised up from the 2.3% growth rate reported in the advance estimate, as real federal outlays for defense grew at a 0.5% rate, revised from the 0.4% growth rate shown previously, and added 0.02 percentage points to 4th quarter GDP, while all other federal consumption and investment grew at a 4.8% rate, revised from the 4.7% growth rate shown previously, and added 0.14 more percentage points to 4th quarter GDP growth….meanwhile, real state and local consumption and investment was revised from growing at a 5.4% rate in the second estimate to growing at a 6.0% rate in this estimate, as state and local investment spending grew at a 22.2% rate and added 0.42 percentage points to 4th quarter GDP, while state and local consumption spending grew at a 2.5% rate and added 0.22 percentage points to GDP….note that government outlays for social insurance are not included in this government GDP component; rather, they are included within personal consumption expenditures only when such funds are spent on goods or services, thus indicating there had been an increase in the output of those goods or services…

Personal Income Rose 0.3% in February, Personal Spending Rose 0.8%, Savings Rate Fell to 3.6%, PCE Price Index Rose 0.3%

The February report on Personal Income and Outlays from the Bureau of Economic Analysis gives us nearly half the data that will go into 1st quarter GDP, since it gives us 2 months of data on our personal consumption expenditures (PCE), which accounts for nearly 70% of GDP, and the PCE price index, the inflation gauge the Fed targets, and which is used to adjust that personal spending data for inflation to give us the relative change in the output of goods and services that our spending indicated….this report also provides us with the nation’s personal income data, disposable personal income, which is income after taxes, and our monthly savings rate…however, because this report feeds into GDP and other national accounts data, the change reported for each of those metrics are not the current monthly change; rather, they’re seasonally adjusted amounts at an annual rate, ie, they tell us how much income and spending would increase in a year if February’s adjusted income and spending were extrapolated over an entire year….

Hence, when the opening line of the press release for this report tell us “Personal income increased $66.5 billion (0.3 percent at a monthly rate) in February“, they mean that the annualized figure for US personal income in February, $23,694.3 billion, was a rounded $66.5 billion, or nearly 0.3% greater than the annualized personal income figure of $23,627.9 for January; the actual change in personal income from January to February is not provided…similarly, annualized disposable personal income, which is income after taxes, rose by more than 0.2%, from an annual rate of an annual rate of $20,658.9 billion in January to an annual rate of $20,709.3 billion in February…the components of the monthly increase in personal income, which can be seen in the Full Release & Tables (PDF) for this release, are also annualized figures…in February, the main contributors to the net $66.5 billion annualized increase in personal income were a $92.0 billion annual rate of increase in income from wages and salaries, and a $39.2 billion annualized increase in government social benefits to individuals, which were partly offset by a $77.7 billion annualized decrease in interest and dividend income…

For the personal consumption expenditures (PCE) that will be included in 1st quarter GDP, the BEA reports that they increased at a $145.5 billion annual rate, or by almost 0.8 percent, rising from an annual rate of $19,043.6 billion in January to an annual rate of $19,189.0 in February, after the January PCE rate was revised down from the originally reported $19,054.2 annually…the current dollar increase in February spending resulted from a $111.8 billion annualized increase to $12,973.1 billion in annualized in spending for services, and a $33.7 billion increase to $6,216.0 billion in spending for goods….total personal outlays for February, which includes interest payments and personal transfer payments in addition to PCE, rose by an annualized $149.9 billion to $19,963.5 billion annually, which left total personal savings, which is disposable personal income less total outlays, at a $745.7 billion annual rate in February, down from the revised $845.3 billion in annualized personal savings in January… as a result, the personal savings rate, which is personal savings as a percentage of disposable personal income, fell to 3.6% in February from January’s savings rate of 4.1%, and was the lowest personal savings rate since December 2022…

Before personal consumption expenditures are used in the 1st quarter GDP computation, they are first adjusted for inflation to give us the real change in consumption, and hence the real change in goods and services that were produced for that consumption…the BEA does that by computing a price index for personal consumption expenditures, which is a chained price index based on 2017 prices = 100, which is included in Table 5 in the pdf for this report….that PCE price index rose from 121.906 in January to 122.312 in February, a month over month inflation rate that’s statistically 0.33304%, which BEA reports as an increase of 0.3 percent, following the PCE price index increase of 0.4% that they reported for January…then, applying that 0.33304% inflation adjustment to the nominal increase in February PCE shows that real PCE rose by 0.42904% in February, which the BEA reports as a 0.4% increase…notice that when those PCE price indexes are applied to a given month’s annualized PCE in current dollars, it gives us that month’s annualized real PCE in chained 2017 dollars, which are the means that the BEA uses to compare one month’s or one quarter’s real goods and services produced to that of another….that result is shown in table 4 of the PDF, where we see that February’s chained dollar consumption total works out to 15,621.6 billion annually, 0.42953% less than January’s 15,688.7 billion, or a change that’s statistically equivalent to the real PCE decrease we just computed from the index values…

Finally, to estimate the impact of the change in PCE on the change in GDP, we have to compare real PCE from January and February to the the real PCE of the 3 months of the fourth quarter….while this report shows PCE for all those months on a monthly basis, the BEA also provides the annualized chained dollar PCE on a quarterly basis in table 3 of the pdf for the 4th quarter GDP report, where we find that the annualized real PCE for the 3 months of the 4th quarter was represented by 15,586.7 billion in chained 2017 dollars…then, by averaging the annualized chained 2017 dollar PCE figures for January and February, 14,382.9 billion and 14,367.2 billion, we get an equivalent annualized PCE for the two months of the 1st quarter that we have the data for so far….when we compare that 1st quarter 2017 dollar PCE average of 15,655.15 to the 4th quarter chained dollar PCE of 15,586.7, we find that 1st quarter real PCE has grown at a 1.77% annual rate for the two months of the 1st quarter that are included in this report (note the math to get that annual rate: (((15,688.7 + 15,621.6) / 2) / 15,586.7) ^ 4 = 1.01768231.…2 months growth at that rate means that if March real PCE does not improve from the average of January and February, growth in PCE would still add 1.22 percentage points to the growth rate of the 1st quarter…

February Durable Goods: New Orders Up 1.4%, Shipments Up 1.2%, Inventories Up 0.3%

The Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for February (pdf) from the Census Bureau reported that the value of the widely watched new orders for manufactured durable goods increased by $3.7 billion or by 1.4 percent to $277.9 billion in February, the first increase since November, after the value of January’s new orders was revised from the $276.7 billion reported last month to $274.2 billion, now a 6.9% decrease from December’s new orders, revised from the 6.1% decrease reported a month ago…even with January’s big decrease, however, year to date new orders were still 1.8% higher than those of the first two months of 2022…

The volatile monthly new orders for transportation equipment led February’s new orders increase, as the value of new transportation equipment orders rose $2.9 billion or 3.3 percent to $90.4 billion, on an 24.6% increase to $15,200 million in the value of new orders for commercial aircraft, and a 9.8% increase to $4,646 million in the value of new orders for defense aircraft, while the value of new orders for motor vehicles and parts also rose 1.8% to $61,742 million…excluding orders for transportation equipment, the value of other new orders was still 0.5% higher, while excluding just new orders for defense equipment, new orders rose 2.2%….meanwhile, new orders for nondefense capital goods less aircraft, a proxy for equipment investment, were up by $547 million or 0.7% to $73,872 million…

Over the same period, the seasonally adjusted value of February’s shipments of durable goods, which will ultimately be included as inputs into various components of 1st quarter GDP after adjusting for changes in prices, also rose for the first time since November, increasing by $3.5 billion or 1.2 percent to $282.7 billion, after the value of January’s shipments was revised from $279.0 billion to $279.2 billion, now down 0.8% from December, rather than the 0.9% decrease reported a month ago….higher shipments of transportation equipment drove the February shipments increase, rising by $3.4 billion or 4.0 percent to $89.8 billion, on a 1.5% increase in the value of shipments of motor vehicles and parts, and a 22.8% increase in the value of shipments of commercial aircraft….on the other hand, the value of shipments of nondefense capital goods less aircraft fell by 0.4% to $75,336 million, after January’s capital goods shipments were revised up from $73,720 million to $74,723 million, now an 0.8% increase from December…

Meanwhile, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, rose by $1.7 billion or 0.3 percent to $528.7 billion, the seventh consecutive increase, after the value of January inventories was revised from $527.6 billion to $527.0 billion, now up just 0.1% from December….the value of inventories of transportation equipment rose $1.2 billion or 0.7 percent to $170.2 billion, on 0.6% higher inventories of commercial aircraft and 0.7% higher inventories of motor vehicles and parts..

Finally, the value of unfilled orders for manufactured durable goods, which are probably a better measure of industry conditions than the widely watched but often very volatile new orders, rose for the eleventh time in 12 months, increasing by a statistically insignificant $0.1 billion to $1,392.9 billion, following a statistically insignificant January decrease to $1,392,8 billion, which was revised from the previously reported 0.2% increase to $1,395.5 billion….a $0.6 billion or a 0.1 percent increase to $898.1 billion in unfilled orders for transportation equipment was the reason for the February increase, while unfilled orders excluding transportation equipment orders were down 0.1% to $495.3 billion…the unfilled order book for durable goods is still 8.9% above the level of last February, with unfilled orders for transportation equipment 15.1% above their year ago level, mostly due to a 22.3% increase in the backlog of orders for commercial aircraft…

February New Home Sales Little Changed, Average Sales Price 7.3% Lower than January

The Census report on New Residential Sales for February (pdf) estimated that new single family homes were selling at a seasonally adjusted pace of 662,000 home sales per year during the month, which was 0.3 percent (±16.2 percent)* below the revised January annual sales rate of 664,000 new home sales, but was 5.9 percent (±14.3 percent)* above the estimated annual rate that new homes were selling at in February of last year….the asterisks indicate that based on their small sampling, Census could not be certain whether February’s new home sales rose or fell from January, or even from February of last year, with the figures in parenthesis representing the 90% confidence range for the reported data in this report, which has the largest margin of error and is subject to the largest revisions of any census construction series….with this report; sales of new single family homes in January were revised from the annual rate of 661,000 reported last month to an annual rate of 664,000, while new home sales in December, initially reported at an annual rate of 664,000 and revised up to a 651,000 rate last month, were revised to a 652,000 a year rate with this report, and November’s annualized new home sales rate, initially reported at an annual rate of 580,000 and revised from a 615,000 rate to a 607,000 a year rate last month, were revised up to a 609,000 annual rate with this release…

The annual rates of sales reported here are seasonally adjusted after extrapolation from the estimates of canvassing Census field reps, which indicated that approximately 60,000 new single family homes sold in February, up from the estimated 57,000 new homes that sold in January and up from the 49,000 that sold in December, and also up from the 58,000 new homes sold in February a year ago…the raw figures from Census field agents further estimated that the median sales price of new houses sold in February was $400,500, down 3.5% from the median sale price of $414,900 in January, and down from the median sales price of $433,300 in February a year ago, while the average February new home sales price was $485,000, down 7.3% from the $523,400 average sales price in January, and down from the average sales price of $499,100 in February a year ago….a seasonally adjusted estimate of 463,000 new single family houses remained for sale at the end of February, which represents a 8.4 month supply at the February sales rate, up from the revised 8.3 months months of new home supply in January….for graphs and additional commentary on this report, see the following posts by Bill McBride at Calculated Risk: New Home Sales at 662,000 Annual Rate in February and New Home Sales at 662,000 Annual Rate in February; Median New Home Price is Down 19% from the Peak, which in turn links to his in-depth real estate newsletter article on this report…

  

(the above is the synopsis that accompanied my regular sunday morning news links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most of which are picked from the aforementioned GGO posts, contact me…)

US oil prices rose for the fourth time in five weeks and ended at a 5 month high on stronger than expected US economic data and expectations that OPEC would leave its production cuts in place….after rising less than 0.1% to $80.63 a barrel as week as an early rally on bullish Chinese data following attacks on Russian refineries was reversed by the threat of a ceasefire in Gaza, the contract price for the benchmark US light sweet crude for May delivery moved higher in Asian trading early Monday, as oil routes remained under threat amid ongoing attacks on Russian oil refineries, then traded higher in New York following a 14-0 vote by the United Nations Security Council passing a resolution calling for a ceasefire in Gaza, and settled $1.32 higher at $81.95 a barrel after the Russian government ordered oil producers to cut their output…oil prices traded in a narrow range Tuesday, as traders weighed the bearish effect of the decline in Russian refinery demand against the bullish effect from the cut in Russia’s oil exports, and settled 33 cents lower at $81.62 a barrel as traders assessed the impact of the wars in Eastern Europe and the Middle East on the supply picture…oil prices extended those losses in overnight trading after the American Petroleum Institute reported a surprise and significantly large crude build and a notable increase in stocks at the Cushing Hub, then continued to trade lower on Wednesday amid signs that OPEC+ appeared unlikely to change its output policy at its meeting next week, and settled 27 cents lower at $81.35 a barrel, as the US dollar strengthened and EIA data showed a surprise jump in both crude and gasoline stocks….oil prices rose by more than $1 a barrel in Asian trading early Thursday, as traders anticipated tighter supplies as OPEC+ producer cartel was widely expected to continue its current production cuts, then added another​ one percent​ gain to that rally in New York trading to settle $1.82 higher at a 5 month high of $83.17 a barrel after the ​US Bureau of Economic Analysis said that the U.S. economy grew 0.2% faster than previously estimated, on upward revisions to ​4th quarter consumer spending and nonresidential fixed investment, leaving oil prices 3.2% higher on the week, 6.3% higher for the month, and 16.1% higher over the first quarter of 2024..

meanwhile, natural gas price quotes finished higher this week on a switch to the higher priced May contract, even as both contracts that were traded as the front month ended lower…after inching up 0.2% to $1.659 per mmBTU last week on a bit of chilly weather, despite the first addition to natural gas inventories of the year, the contract price for natural gas for April delivery opened four cents lower on Monday morning, on ample storage levels and forecasts for weak heating demand, then hovered near the $1.640 level for much of the day before settling 4.4 cents lower at a three-week low of $1.615 per mmBTU, on lowered demand forecasts for this week, a glut of gas in storage​, and expectations that gas flows to LNG export plants would remain low…after volatile trading between $1.461 and $1.647​ on its last day of trading Tuesday, the April gas contract finished 4.0 cents, or 2.5% lower at a three and a half year low of $1.575 per mmBTU on mild forecasts, while the more actively traded May contract for natural gas traded sideways near $1.785 throughout the day and settled a tenth of a cent lower at $1.788 per mmBTU as May gas traders positioned ahead of the storage report on Thursday…with markets now quoting the contract price of natural gas for May delivery, that contract opened 4 cents lower on Wednesday and retreated to trade near $1.720 for most of the day, as weak fundamentals and a drop in weekly LNG export volume provided bearish pressure, before settling 7.0 cents lower at $1.718 per mmBTU amid a plethora of bearish fundamentals, most notably abundant supply met by a shortage of demand…natural gas prices opened two cents higher ahead of the storage report on Thursday, but to slipped back ​to an intraday low of $1.718 minutes after the report, before staging a steady advance to settle 4.5 cents higher at $1.763 per mmBTU, as traders considered the implications of ​the larger-than-anticipated storage withdrawal… while natural gas price quotes ended 6.3% higher on the week, the contract price of May gas, which had ended the prior week at $1.812 per mmBTU, finished 2.7% lower..

The EIA’s natural gas storage report for the week ending March 22nd indicated that the amount of working natural gas held in underground storage fell by 36 billion cubic feet to 2,296 billion cubic feet by the end of the week, which left our natural gas supplies 430 billion cubic feet, or 23.0% above the 1866 billion cubic feet that were in storage on March 22nd of last year, and 669 billion cubic feet, or 41.1% more than the five-year average of 1,627 billion cubic feet of natural gas that were typically in working storage as of the 22nd of March over the most recent five years…the 36 billion cubic foot withdrawal from US natural gas working storage for the cited week was more than the 31 billion cubic foot withdrawal that was the consensus estimate from S&P Global Commodity Insights’ weekly gas storage survey, while it was quite a bit less than the 55 billion cubic feet that were pulled from natural gas storage during the corresponding third week of March 2023, but was more than the average 27 billion cubic feet withdrawal from natural gas storage that has been typical for the same last winter week over the past 5 years…

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending March 22nd indicated that after an increase in our oil imports and a drop in our oil exports, we had surplus oil to add to our stored commercial crude supplies for 7th time in nine weeks and for the 15th time in the past 23 weeks, despite a decrease in oil supplies that the EIA could not account for….Our imports of crude oil rose by an average of 424,000 barrels per day to an average of 6,702,000 barrels per day, after rising by an average of 787,000 barrels per day over the prior week, while our exports of crude oil fell by 700,000 barrels per day to average 4,181,000 barrels per day, which when used to offset our imports, meant that the net of our trade in oil worked out to a net import average of 2,521,000 barrels of oil per day during the week ending March 22nd, 1,124,000 more barrels per day than the net of our imports minus our exports during the prior week. At the same time, transfers to our oil supply from Alaskan gas liquids, from natural gasoline, from condensate, and from unfinished oils averaged 382,000 barrels per day, while during the same week, production of crude from US wells was unchanged at 13,100,000 barrels per day. Hence our daily supply of oil from the net of our international trade in oil, from transfers, and from domestic well production appears to have averaged a rounded total of 16,003,000 barrels per day during the March 22nd reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,932,000 barrels of crude per day during the week ending March 22nd, an average of 127,000 more barrels per day than the amount of oil that our refineries reported they were processing during the prior week, while over the same period the EIA’s surveys indicated that a rounded average of 558,000 barrels of oil per day were being added to the supplies of oil stored in the US… So, based on that reported & estimated data, the crude oil figures provided by the EIA for the week ending March 22nd appear to indicate that our total working supply of oil from net imports, from transfers, and from oilfield production was 488,000 barrels per day less than what what was added to storage plus our oil refineries reported they used during the week…To account for that difference between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a +488,000] barrel per day figure onto line 16 of the weekly U.S. Petroleum Balance Sheet, in order to make the reported data for the supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there was an error or omission of that magnitude in the week’s oil supply & demand figures that we have just transcribed… ​Despite that, since most oil traders react to these weekly EIA reports as if they were accurate, and since these weekly figures therefore often drive oil pricing, and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it’s published, and just as it’s watched & believed to be reasonably reliable by most everyone in the industry…(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….(note there is also an aging twitter thread from an EIA administrator addressing these ongoing weekly errors, and what they had hoped to do about it)

This week’s average 558,000 barrel per day increase in our overall crude oil inventories came as an average of 452,000 barrels per day were being added to our commercially available stocks of crude oil, while an average of 106,000 barrels per day were being added to our Strategic Petroleum Reserve, the sixteenth SPR increase in twenty-three weeks, following nearly continuous withdrawals over the prior 39 months… Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to 6,419,000 barrels per day last week, which was 1.1% more than the 6,350,000 barrel per day average that we were importing over the same four-week period last year. This week’s crude oil production was reported to be unchanged at 13,100,000 barrels per day because the EIA’s rounded estimate of the output from wells in the lower 48 states was unchanged at 12,700,000 barrels per day, while Alaska’s oil production was 9,000 barrels per day lower at 432,000 barrels per day, but still added the same 400,000 barrels per day to the EIA’s rounded national total as it did last week…US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure matches that of our pre-pandemic production peak, and is also 35.1% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021.

US oil refineries were operating at 88.7% of their capacity while processing those 15,932,000 barrels of crude per day during the week ending March 22nd, up from their 87.8% utilization rate of a week earlier, and finally approaching a normal operating rate for mid March, after recovering from damage caused by the arctic cold that penetrated to the Gulf Coast in mid January… the 15,932,000 barrels of oil per day that were refined this week were 0.8% more than the 15,813,000 barrels of crude that were being processed daily during week ending March 24th of 2023, and 0.6% more than the 15,831,000 barrels that were being refined during the prepandemic week ending March 22nd, 2019, when our refinery utilization rate was at a below normal 86.6%..

Even with the increase in the amount of oil being refined this week, gasoline output from our refineries was somewhat lower, decreasing by 435,000 barrels per day to 9,213,000 barrels per day during the week ending March 22nd, after our refineries’ gasoline output had decreased by 263,000 barrels per day during the prior week. This week’s gasoline production was 8.2% less than the 10,038,000 barrels of gasoline that were being produced daily over week ending March 24th of last year, and 4.6% less than the gasoline production of 9,657,000 barrels per day during the prepandemic week ending March 22nd, 2019….on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 124,000 barrels per day to 4,814,000 barrels per day, after our distillates output had increased by 128,000 barrels per day during the prior week. After six straight ​solid production increases, our distillates output was 3.9% more than the 4,633,000 barrels of distillates that were being produced daily during the week ending March 24th of 2023, but ​it was still 2.3% less than the 4,925,000 barrels of distillates that were being produced daily during the week ending March 22nd, 2019…

Even with this week’s decrease in our gasoline production, our supplies of gasoline in storage at the end of the week rose for the first time in eight weeks, following five prior increases, increasing by 1,299,000 barrels to 232,072,000 barrels during the week ending March 22nd, after our gasoline inventories had decreased by 3,310,000 barrels during the prior week. Our gasoline supplies rose this week because the amount of gasoline supplied to US users fell by 94,000 barrels per day to 8,715,000 barrels per day, and because our exports of gasoline fell by 247,000 barrels per day to 786,000 barrels per day, and because our imports of gasoline rose by 26,000 barrels per day to 522,000 barrels per day.…After thirty-two gasoline inventory withdrawals over the past fifty-two weeks, our gasoline supplies were still 2.4% above last March 24th’s gasoline inventories of 226,694,000 barrels, but about 1% below the five year average of our gasoline supplies for this time of the year…

Even with this week’s increase in our distillates production, our supplies of distillate fuels fell for 7th time in nine weeks, following eight consecutive prior increases, decreasing by 1,185,000 barrels to 117,337,000 barrels over the week ending March 15th, after our distillates supplies had increased by 624,000 barrels during the prior week. Our distillates supplies fell this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 242,000 barrels per day to 4,028,000 barrels per day, and because our exports of distillates rose by 135,000 barrels per day to 1,120,000 barrels per day, while our imports of distillates fell by 5,000 barrels per day to 165,000 barrels per day…Even with 30 inventory decreases over the past fifty-two weeks, our distillates supplies at the end of the week were 0.6% above the 116,683,000 barrels of distillates that we had in storage on March 24th of 2023, but about 6% below the five year average of our distillates inventories for this time of the year…

Finally, after this week’s increase in our oil imports and decrease in our oil exports, our commercial supplies of crude oil in storage rose for the 16th time in twenty-six weeks and for the 23rd time in the past year, increasing by 3,165,000 barrels over the week, from 445,042,000 barrels on March 15th to 448,207,000 barrels on March 22nd, after our commercial crude supplies had decreased by 1,952,000 barrels over the prior week… With this week’s increase, our commercial crude oil inventories rose to about 2% below the most recent five-year average of commercial oil supplies for this time of year, but were still about 32% above the average of our available crude oil stocks as of the fourth weekend of March over the 5 years at the beginning of the past decade, with the big difference between those comparisons arising because it wasn’t until early 2015 that our oil inventories had first topped 400 million barrels. After our commercial crude oil inventories had jumped to record highs during the Covid lockdowns of the Spring of 2020, then jumped again after February 2021’s winter storm Uri froze off US Gulf Coast refining, but then fell in the wake of the Ukraine war, only to jump again following the Christmas 2022 refinery freeze offs, our commercial crude supplies as of this March 22nd were still 5.4% less than the 473,691,000 barrels of oil left in commercial storage on March 24th of 2023, but 5.4% more than the 409,950,000 barrels of oil that we still had in storage on March 25th of 2022, while still 10.7% less than the 501,835,000 barrels of oil we had in commercial storage on March 26th of 2021, after refinery damage from winter storm Uri left even more crude oil remaining after 2020’s pandemic precautions had left a lot of oil unused…

This Week’s Rig Count

In lieu of a detailed report on the rig count, we are again just including a screenshot of the rig count summary from Baker Hughes…note that this week’s rig count was released a day early, ahead of the Good Friday holiday, and hence only covers 6 days…in the table below, the first column shows the active rig count as of March 28th, the second column shows the change in the number of working rigs between last week’s count (March 22nd) and this week’s (March 28th) count, the third column shows last week’s March 22nd active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting period a year ago, which in this week’s case was the 31st of March, 2023…

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There were just two widely watched housing reports released last week: the February report on New Residential Construction, from the Census bureau, and the Existing Home Sales Report for February from the National Association of Realtors (NAR)….the week also saw the release of the Regional and State Employment and Unemployment Report for February from the Bureau of Labor Statistics, a report which breaks down the two employment surveys from the monthly national jobs report by state and region (Note: you might recall that January’s state and regional report was released last week; it had been delayed in order to compile the annual revisions, and this February report puts the report back on its normal release schedule)….while the text of this report provides a useful summary of the state and regional data, the serious statistical aggregation can be found in the tables linked at the end of the report, where one can find the civilian labor force data and the change in payrolls by industry for each of the 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands…

This week also saw the release of another regional Fed manufacturing survey for March: the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions ticked down to +3.2 in March from +5.6 in February, just the fifth positive index reading since May 2022, indicating that a small plurality of that region’s manufacturing firms are seeing increased activity again this month…

Housing Starts and Building Permits Reported Higher in February

The February report on New Residential Construction (pdf) from the Census Bureau estimated that new housing units were being started at a seasonally adjusted annual rate of 1,521,000 in February, which was 10.7 percent (±14.2 percent)* above the revised January estimated annual rate of 1,374,000 starts, and was 5.9 percent (±10.0 percent)* above the rate that housing units were being started in February of 2023…the asterisks indicate that the Census does not have sufficient data to determine whether housing starts actually rose or fell during the month, or even from those of a year ago, with the figures in parenthesis the most likely range of the change indicated; in other words, February’s housing starts could have been down by 3.5% or up by as much as 24.9% from those of January, with revisions of a greater magnitude in either direction still possible…in this report, the annual rate for January housing starts was revised from the 1,331,000 reported last month to 1,374,000, while December starts, which were first reported at a 1,460,000 annual rate, were revised from last month’s initial revised figure of 1,562,000 annually up to a 1,566,000 annual rate with this report….

The annual rates of housing starts reported here were extrapolated from a survey of a small percentage of US building permit offices visited by canvassing Census field agents, which estimated that 108,100 housing units were started in February, up from the 97,400 units that were started in January but down from the 108,900 units that were started in December….of those housing units started in February, an estimated 79,200 were single family homes and 27,800 were units in structures with more than 5 units, up from the revised 69,700 single family starts in January. and up from the 26,500 units started in structures with more than 5 units in January…(NB: those figures don’t add up because there were 1100 housing units started in structures with 2 to 4 units in February, down from 1200 in January, a figure usually small enough that it is typically ignored..

The monthly data on new building permits, with a smaller margin of error, are probably a better monthly indicator of new housing construction trends than the volatile and often revised housing starts data….for February, Census estimated new building permits for housing units were being issued at a seasonally adjusted annual rate of 1,518,000, which was 1.9 percent above the revised January rate of 1,489,000 permits, and was 2.4 percent above the rate of building permit issuance in February a year earlier…

Again, these annualized estimates for new permits reported here were extrapolated from the unadjusted estimates collected monthly by canvassing census agents, which showed permits for roughly 118,300 housing units were issued in February, up from the revised estimate of 114,800 new permits issued in January….of those permits issued in February, 79,300 were permits for single family homes and 35,100 were permits for units in structures of more than 5 units, up from the 75,900 single family permits in January, but down from January’s 35,100 permits for units in structures of more than 5 units…

For graphs and commentary on this report, see the following posts by Bill McBride at Calculated Risk: Housing Starts increased to 1.521 Million Annual Rate in February and Single Family Starts Up 35% Year-over-year in February; Multi-Family Starts Down Sharply, which in turn links to his real estate newsletter post with the same title…

Existing Home Sales Rose 9.5% in February; Prices 5.7% Higher than a Year Ago

The National Association of Realtors (NAR) reported that existing home sales increased by 9.5% from January to February on a seasonally adjusted basis, the largest jump in a year, projecting that 4.38 million existing homes would sell over an entire year if the February home sales pace were extrapolated over that year, a pace that was still 3.3% below the annual sales rate projected for February of last year….the January home sales pace was unrevised from the 4.00 million annual sales rate reported a month ago with this report….the NAR also reported that the median sales price for all existing-home types was $384,500 in February, which was 5.7% higher than in February a year earlier, and which they report is “the eighth consecutive month of year-over-year price gains.“, even though it’s the first month over month price increase in those eight months…..the NAR press release, which is titled “Existing-Home Sales Vaulted 9.5% in February, Largest Monthly Increase in a Year“, is in easy to read plain English, so if you’re interested in further details on housing inventories, cash sales, distressed sales, first time home buyers, etc., you can easily find them in that press release…as sales of existing properties do not add to our national output, neither these home sales nor the prices for which these homes sell are included in GDP, except insofar as real estate, local government and banking services are rendered during the selling process…

Since this report is entirely seasonally adjusted and at a not very informative annual rate, we usually look at the raw data overview (pdf) to see what actually happened with home sales during the month…this unadjusted data indicates that roughly 271,000 homes sold in February, up 15.8% from the revised 234,000 homes that sold in January, and 0.7% more than the 269,000 homes that sold in February of last year….that same pdf indicates that the median home selling price for all housing types rose by 1.6%, from a revised $378,600 in January to $384,500 in February, and that it was up 5.7% from $363,600 in February of last year, while it was down 6.2% from $410,100 in June of 2023, with prices falling in the Northeast in February, while increasing modestly elsewhere….for both seasonally adjusted and unadjusted graphs and additional commentary on this report, see the following two posts from Bill McBride at Calculated Risk: NAR: Existing-Home Sales Increased to 4.38 million in February and NAR: Existing-Home Sales Increased to 4.38 million SAAR in February; Median Prices Down 7.1 From Peak (NSA), which links to his in depth newsletter article with more details on this report..

  

(the above is the synopsis that accompanied my regular sunday morning news links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most of which are picked from the aforementioned GGO posts, contact me…)

oil prices hit twenty week high; first 2024 injection of natural gas into storage puts inventories far above any mid-March level on record; natural gas supplies now seem likely to exceed storage capacity later this year; DUC well backlog at 5.2 months even as completions increase…

US oil prices finished virtually unchanged after hitting a 20 week high ​m​id week as an early rally on bullish Chinese data following attacks on Russian refineries was reversed by the threat of a ceasefire in Gaza…after rising 3.9% to a four month high of $81.04 a barrel last week on bullish demand outlooks from the three major forecasting agencies, falling US oil inventories, and intensifying Ukrainian attacks against Russian oil refineries, the contract price for the benchmark US light sweet crude for April delivery continued higher early Monday, supported by ​weekend news of Ukraine’s attacks on Russian energy infrastructure, ​i​ncjuding new fires at two refineries, then rallied solidly after Chinese data showed their exports of refined fuels had plummeted by double-digits from a year ago during January and February, suggesting a rebound in domestic fuel demand from their transportation and heavy industry sectors, and settled $1.68 or more than 2% higher at a new 4 month high of $82.72 a barrel as macro-economic data from China came in a​bove expectations, Iraq reduced its oil exports to absorb ​i​ts oversupply from prior months, and Ukrainian attacks on Russian refineries reduced the amount of distilled products output from Russia…oil prices rallied sharply higher for the second consecutive session on Tuesday as the market remained supported by the Ukrainian attacks against major Russian refineries, and settled 75 cents higher near a five month high at $83.47 a barrel as oil options had their least bearish tilt in months and key timespreads suggested traders were pricing in a tighter market….oil traded lower in overseas markets early Wednesday on a stronger US dollar and mixed inventory data from the American Petroleum Institute, then retreated further in the New York session as traders awaited the Fed’s interest rate policy announcement and took profits ahead of the April contract’s expiration at the close​, and settled $1.79 lower at $81.68 a barrel as trading in that April oil contract expired, while the more actively traded oil contract for the benchmark US light sweet crude for May delivery settled $1.46 lower at $81.27 barrel…with markets now quoting the contract price for May oil, prices on that contract moved higher in overnight trading as the U.S. dollar weakened after Fed officials reaffirmed they s​aw three interest rate cuts ​coming later this year, ​but then moved lower early Thursday on reports of a UN draft resolution calling for a ceasefire in Gaza and as another round of profit-taking kicked in, and settled down 20 cents on the day at $81.27 a barrel pressured by weaker U.S. gasoline demand and the UN draft resolution calling for a ceasefire in Gaza…oil prices moved lower on Gazan ceasefire talks in Asian trading Friday, then fell 44 cents to $80.63 a barrel in the US session as the war in Europe and a shrinking U.S. rig count cushioned the drop, to leave oil prices less than 0.5% lower on the week, while the contract price for the US benchmark oil for May, which had closed the prior week at $80.58 a barrel, finished less than 0.1% higher..

meanwhile, natural gas prices inched higher for the first time in three weeks on a bit of chilly weather, despite the first addition to natural gas inventories of the year…after falling 8.3% to $1.655 per mmBTU last week on the smallest withdrawal of gas from storage of the winter and ​on ongoing weak demand for heating, the contract price for natural gas for April delivery opened seven cents above Friday’s ​last price on Monday​ morning on supportive weather forecasts for the coming week, but backed off after the opening rally to settle 4.8 cents higher at $1.703 per mmBTU on colder forecasts and lower output due to lower prices…natural gas prices opened 4 cents higher on Tuesday, as short-term forecasts calling for increased demand and production cuts continued to provide support, and prices settled 4.1 cents higher at $1.744 per mmBTU as bulls fed on near-term weather forecasts that would support a bump in demand and a pullback in the widening of natural gas storage surpluses….however, the April contract opened lower on Wednesday and slid 4.5 cents or more than 2% to settle at $1.699 per mmBTU on forecasts for less demand over the next two weeks than had been expected​, and ​on news of a demand-destroying, extended outage of two liquefaction trains at Freeport LNG’s export plant in Texas….natural gas prices opened lower again on Thursday, knocked down overnight by softening forecasts and the expectation of a historically unseasonal storage injection​, and settled 1.6 cents lower at $1.683 per mmBTU after the EIA reported a small injection into inventories for the week ended March 15….natural gas prices extended ​those losses into the week’s last session as a storage glut and a trimming of demand forecasts kept the pressure on the contract, which settled 2.4 cents lower on the day at $1.659 per mmBTU, but was still up 0.2% on the week​…

The EIA’s natural gas storage report for the week ending March 15th indicated that the amount of working natural gas held in underground storage in the US increased for the first time this year, rising by 7 billion cubic feet to 2,332 billion cubic feet by the end of the week, which left our natural gas supplies 411 billion cubic feet, or 21.4% above the 1,921 billion cubic feet that were in storage on March 15th of last year, 678 billion cubic feet, or 41.0% more than the five-year average of 1,654 billion cubic feet of natural gas that were typically in working storage as of the 15th of March over the most recent five years, and the highest late winter inventory level for any March 15th in 30 years of EIA records…the 7 billion cubic foot injection into US natural gas working storage for the cited week was more than the 4 billion cubic foot injection into storage forecast by a Reuters survey of analysts, and it contrasts dramatically with the 68 billion cubic feet that were pulled from natural gas storage during the corresponding second week of March 2023, and also with the average 42 billion cubic feet withdrawal from natural gas storage that has been typical for the same late winter week over the past 5 years…

with the first injection of natural gas into storage for this year, we’ll include a copy of the natural gas storage graph that the EIA includes with this ​weekly report…in the graph below, the blue line tracks the amount of natural gas that we had in storage each week over the past two years, the dark grey line shows the prior 5 year average of the amount of natural gas in storage for any given date over the two years shown, while the grey shaded area across the graph encompasses all the storage levels recorded over the prior five year for each date that is covered on the chart…

as you can see by following the blue line, our natural gas inventories were not only below average, but at the lower bound of the five year average thru most of 2022, despite an explosion at the Freeport Texas liquefaction facility ​that shut that plant down for the 2nd half of that year, but then moved to above average when February 2023 turned warmer​ and demand for heating waned, and subsequently stayed above average ​since as US production stayed high in the face of modest demand…a​t the ​right end of ​the graph, the blue line represents the unusual storage trajectory for this winter, which has seen​ well above normal temperatures and hence below normal demand except for ​t​hat couple weeks in mid-January…as a result​, the blue line​ representing gas in storage has moved well above the normal range, and this week even turned higher about three weeks before normal…the storage levels represented over the last three weeks, ie, since the last week of February, are highest on record for each date, and have tracked at roughly double the 30 year average for dates in March…our underground storage capacity is roughly 4,000 billion cubic feet, so our current storage ​level of over 2,300 billion cubic feet means we enter the summer with only 1,700 billion cubic feet of ​empty space left, when a normal summer usually results in a build of ​between 2,000 and 2,400​ billion cubic feet…hence, it now seems likely that we’ll run out of storage space for natural gas before the ​storage injection season ​winds down this Fall..

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending March 15th indicated that after a big jump in our oil exports, we needed to pull oil out of our stored commercial crude supplies for 2nd time in eight weeks and for the 8th time in the past 22 weeks, even after a sizable increase in oil supplies that the EIA could not account for….Our imports of crude oil rose by an average of 787,000 barrels per day to an average of 6,278,000 barrels per day, after falling by an average of 1,730,000 barrels per day to a fifty week low over the prior week, while our exports of crude oil jumped by 1,734,000 barrels per day to average 4,881,000 barrels per day, which ​h​en used to offset imports meant that the net of our trade in oil worked out to a net import average of 1,397,000 barrels of oil per day during the week ending March 15th, 947,000 fewer barrels per day than the net of our imports minus our exports during the prior week. At the same time, transfers to our oil supply from Alaskan gas liquids, from natural gasoline, from condensate, and from unfinished oils averaged 386,000 barrels per day, while during the same week, production of crude from US wells was unchanged at 13,100,000 barrels per day. Hence our daily supply of oil from the net of our international trade in oil, from transfers, and from domestic well production appears to have averaged a rounded total of 14,883,000 barrels per day during the March 15th reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,785,000 barrels of crude per day during the week ending March 15th, an average of 127,000 more barrels per day than the amount of oil that our refineries reported they were processing during the prior week, while over the same period the EIA’s surveys indicated that a rounded average of 172,000 barrels of oil per day were being pulled out of the supplies of oil stored in the US… So, based on that reported & estimated data, the crude oil figures provided by the EIA for the week ending March 15th appear to indicate that our total working supply of oil from storage, from net imports, from transfers, and from oilfield production was 730,000 barrels per day less than what our oil refineries reported they used during the week…To account for that difference between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a +730,000] barrel per day figure onto line 16 of the weekly U.S. Petroleum Balance Sheet, in order to make the reported data for the supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there was an error or omission of that size in the week’s oil supply & demand figures that we have just transcribed….Moreover, since 305,000 barrels of oil demand per day could not be accounted for in last week’s EIA data, that means there was a 1,035,000 barrel per day difference between this week’s oil balance sheet error and the EIA’s crude oil balance sheet error from a week ago, and hence the changes to supply and demand from that week to this one that are indicated by this week’s report are off by that much, and therefore ​meaningless… ​B​ut despite that, since most oil traders react to these weekly EIA reports as if they were accurate, and since these weekly figures therefore often drive oil pricing (as is obvious to anyone who watches oil prices), and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it’s published, and just as it’s watched & believed to be reasonably reliable by most everyone in the industry…(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….(note there is also an aging twitter thread from an EIA administrator addressing these ongoing weekly errors, and what they had hoped to do about it)

This week’s average 172,000 barrel per day decrease in our overall crude oil inventories came as an average of 279,000 barrels per day were being pulled out of our commercially available stocks of crude oil, while an average of 107,000 barrels per day were being added to our Strategic Petroleum Reserve, the fifteenth SPR increase in twenty-two weeks, following nearly continuous withdrawals over the prior 39 months… Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to 6,334,000 barrels per day last week, which was still 2.0% more than the 6,217,000 barrel per day average that we were importing over the same four-week period last year. This week’s crude oil production was reported to be unchanged at 13,100,000 barrels per day because the EIA’s rounded estimate of the output from wells in the lower 48 states was unchanged at 12,700,000 barrels per day, while Alaska’s oil production was 9,000 barrels per day higher at 441,000 barrels per day, but still added the same 400,000 barrels per day to the EIA’s rounded national total as it did last week…US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure matches that of our pre-pandemic production peak, and is also 35.1% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021.

US oil refineries were operating at 87.8% of their capacity while processing those 15,785,000 barrels of crude per day during the week ending March 15th, up from their 86.8% utilization rate of a week earlier, but still on the low side of the normal operating range for mid March, as refinery operations ​slowly recover from damage caused by the arctic cold that penetrated to the Gulf Coast in mid January… the 15,785,000 barrels per day of oil that were refined this week were 2.7% more than the 15,376,000 barrels of crude that were being processed daily during week ending March 17th of 2023 (after even worse refinery-freeze-off damage following Christmas 2022’s winter storm Elliot), but 2.6% less than the 16,198,000 barrels that were being refined during the prepandemic week ending March 15th, 2019, when our refinery utilization rate was at a closer to normal 88.9%..

Even with the increase in the amount of oil being refined this week, gasoline output from our refineries was somewhat lower, decreasing by 263,000 barrels per day to 9,648,000 barrels per day during the week ending March 15th, after our refineries’ gasoline output had increased by 285,000 barrels per day during the prior week. This week’s gasoline production was still 1.5% more than the 9,503,000 barrels of gasoline that were being produced daily over week ending March 3rd of last year, but 2.8% less than the gasoline production of 9,925,000 barrels per day during the prepandemic week ending March 15th, 2019….on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 128,000 barrels per day to 4,690,000 barrels per day, after our distillates output had increased by 217,000 barrels per day during the prior week. After five straight production increases, our distillates output was 4.2% more than the 4,503,000 barrels of distillates that were being produced daily during the week ending March 17th of 2023, but ​still 4.7% less than the 4,923,000 barrels of distillates that were being produced daily during the week ending March 15th, 2019…

With this week’s decrease in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the seventh consecutive week, following five prior increases, decreasing by 3,310,000 barrels to 230,773,000 barrels during the week ending March 15th, after our gasoline inventories had decreased by 5,662,000 barrels during the prior week. Our gasoline supplies fell by less this week because the amount of gasoline supplied to US users fell by 235,000 barrels per day to 8,809,000 barrels per day, ​while our exports of gasoline rose by 34,000 barrels per day to 1,033,000 barrels per day, and while our imports of gasoline fell by 138,000 barrels per day to 496,000 barrels per day.…After thirty-three gasoline inventory withdrawals over the past fifty-two weeks, our gasoline supplies were still 0.5% above than last March 17th’s gasoline inventories of 229,598,000 barrels, but about 2% below the five year average of our gasoline supplies for this time of the year…

With this week’s increase in our distillates production, our supplies of distillate fuels rose for 2nd time in eight weeks, following eight consecutive prior increases, increasing by 624,000 barrels to 118,522,000 barrels over the week ending March 15th, after our distillates supplies had increased by 888,000 barrels during the prior week. Our distillates supplies rose by less this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 411,000 barrels per day to 3,786,000 barrels per day, while our exports of distillates fell by 246,000 barrels per day to 985,000 barrels per day and while our imports of distillates fell by 1,000 barrels per day to 170,000 barrels per day…Even with 29 inventory decreases over the past fifty-two weeks, our distillates supplies at the end of the week were 1.8% above the 116,402,000 barrels of distillates that we had in storage on March 17th of 2023, but about 5% below the five year average of our distillates inventories for this time of the year…

Finally, after this week’s big increase in our oil exports, our commercial supplies of crude oil in storage fell for the 11th time in twenty-six weeks and for the 30th time in the past year, decreasing by 1,952,000 barrels over the week, from 446,994,000 barrels on March 8th to 445,042,000 barrels on March 15th, after our commercial crude supplies had decreased by 1,536,000 barrels over the prior week… With this week’s decrease, our commercial crude oil inventories remained about 3% below the most recent five-year average of commercial oil supplies for this time of year, but were still 31.9% above the average of our available crude oil stocks as of the third weekend of March over the 5 years at the beginning of the past decade, with the big difference between those comparisons arising because it wasn’t until early 2015 that our oil inventories had first topped 400 million barrels. After our commercial crude oil inventories had jumped to record highs during the Covid lockdowns of the Spring of 2020, then jumped again after February 2021’s winter storm Uri froze off US Gulf Coast refining, but then fell in the wake of the Ukraine war, only to jump again following the Christmas 2022 refinery freeze offs, our commercial crude supplies as of this March 15th were still 7.5% less than the 481,180,000 barrels of oil left in commercial storage on March 17th of 2023, but 7.7% more than the 413,399,000 barrels of oil that we still had in storage on March 18th of 2022, while still 11.5% less than the 502,711,000 barrels of oil we had in commercial storage on March 19th of 2021, after refinery damage from winter storm Uri ​l​eft even more ​crude oil remaining after 2020’s pandemic precautions had left a lot of oil unused…

This Week’s Rig Count

In lieu of a detailed report on the rig count, we are again just including a screenshot of the rig count summary from Baker Hughes…in the table below, the first column shows the active rig count as of March 22nd, the second column shows the change in the number of working rigs between last week’s count (March 15th) and this week’s (March 22nd) count, the third column shows last week’s March 15th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting period a year ago, which in this week’s case was the 24th of March, 2023…

DUC well report for February

Monday of ​t​he past week saw the release of the EIA’s Drilling Productivity Report for March, which included the EIA’s February data on drilled but uncompleted (DUC) oil and gas wells in the 7 most productive shale regions (click tab 3)….that data showed a decrease in uncompleted wells nationally for the 42nd time out of the past 45 months, ​even as both drilling of new wells and completions of drilled wells increased in February for the first time in 16 months. but remained well below the average pre-pandemic levels….for the 7 sedimentary regions covered by this report, the total count of DUC wells decreased by 3 wells, falling from a revised 4,486 DUC wells in January to 4,483 DUC wells in February, which was also 17.5% fewer DUCs than the 5,435 wells that had been drilled but remained uncompleted as of the end of February of a year ago…this month’s DUC decrease occurred as 862 wells were drilled in the seven regions that this report covers (representing 87% of all U.S. onshore drilling operations) during February, up by 7 from the 855 wells that were drilled in January, while 865 wells were completed and brought into production by fracking them, up from the 846 well completions seen in January, but down from the 906 completions seen during February of last year….at the February completion rate, the 4,483 drilled but uncompleted wells remaining at the end of the month represents a 5.2 month backlog of wells that have been drilled but are not yet fracked, up from the 5.1 month DUC well backlog of a month ago, and up from the eight year low of 4.6 months of January 2023, on a completion rate that is still more than 20% below 2019’s pre-pandemic average…

the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, was up by 11 from a month earlier, rising from 794 DUC wells at the end of January to 805 DUC wells at the end of January, as 83 new wells were drilled into the Marcellus and Utica shales during the month, while 72 of the already drilled wells in the region were fracked..

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Major monthly reports released over the past week included the February Consumer Price Index, the February Producer Price Index and the February Import-Export Price Index, all from the Bureau of Labor Statistics (BLS), the Retail Sales report for February and the conjoined Business Sales and Inventories for January from the Census Bureau, and the February report on Industrial Production and Capacity Utilization from the Fed….in addition, the week also saw the release of the Regional and State Employment and Unemployment Report for January from the BLS, a report which breaks down the two employment surveys from the monthly national jobs report by state and region, later than usual due to the annual revisions….while the text of that report provides a useful summary of this data, the serious statistical aggregation can be found in the tables linked at the end of the report, where one can find the civilian labor force data and the change in payrolls by industry for each of the 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands…

This week also saw the release of the first regional Fed manufacturing surveys for March: the Empire State Manufacturing Survey from the New York Fed, which covers all of New York state, one NYC suburban county in Connecticut, Puerto Rico and northern New Jersey, reported their headline general business conditions index fell from –2.4 in February to -20.9 in March, the fifth consecutive negative reading, suggesting that the ongoing contraction of First District manufacturing was much more widespread than a month earlier…

CPI Rose 0.4% in February on Higher Rent, Energy, and Transportation Services

The consumer price index was 0.4% higher in February, as higher prices for rent, fuel, utilities, car insurance, used vehicles, transportation services, clothing, and internet services were just partly offset by lower prices for new cars, furniture and appliances, and medical care services…the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the weighted average of seasonally adjusted prices of consumer goods and services was 0.4% higher in February, after being 0.3% higher in January, 0.2% higher in December, 0.2% higher in November, 0.1% higher in October, 0.4% higher in September, after rising by 0.5% in August, by 0.2% in July, by 0.2% in June, by 0.1% in May, by 0.4% in April, by 0.1% in March, and by 0.4% in February of last year….

The unadjusted CPI-U index, which was originally set to have prices of the 1982 to 1984 period equal to 100, rose from 308.417 in January to 310.326 in February which left it statistically 3.15317% higher than the index reading of 300.840 for February of last year, which is reported as a 3.2% year over year increase, up from the 3.1% year over year increase reported for January, with such widely cited year over year figures often telling us more about last year’s CPI changes than this years…with higher fuel prices offset by flat prices for food, seasonally adjusted core prices, which exclude food and energy, were also up by 0.4% for the month, as the unadjusted core price index rose from 313.623 to 315.419, which left the core index 3.7525% ahead of its year ago reading of 304.011, which is reported as a 3.8% year over year increase, down from the 3.9% year over year core price increase that was reported in January, and well below the 6.6% annual increase reported for September 2022, which had been the largest annual increase in core prices in forty years..

The volatile seasonally adjusted energy price index rose 2.3% in February, after falling by 0.9% in January, by 0.2% in December, by 1.6% in November and by 2.1% in October, but after rising by 1.2% in September, rising by 4.4% in August, and being unchanged in July, and is still 4.6% lower than in January of a year ago….the price index for energy commodities was 3.6% higher in February, while the price index for energy services was 0.8% higher, after it had risen by 1.4% in January….the energy commodity index was up 3.6% on a 3.8% increase in the price of gasoline and and a 1.1% increase in the price of fuel oil, while prices for other energy commodities, including propane, kerosene, and firewood, were on average 0.5% higher…within energy services, the price index for utility gas service rose 2.3% in February after rising 2.0% in January, but is still 8.8% lower than it was a year ago, while the electricity price index rose 0.8% in February after rising 1.2% in January… energy commodities are still averaging 4.2% lower than their year ago levels, with gasoline prices averaging 1.9% lower than they were a year ago, but the energy services price index is now up 0.5% from last February, as electricity prices are averaging 3.6% higher than a year ago…

Meanwhile, the seasonally adjusted food price index was unchanged in February, after being 0.4% higher in January, 0.2% higher in December, 0.2% higher in November, 0.3% higher in October, 0.2% higher in September, 0.2% higher in August, and 0.2% higher in July, as the price index for food purchased for use at home was unchanged, after being 0.4% higher in January, 0.1% higher in December, unchanged in November, and 0.3% higher in October, while the price index for food bought to eat away from home was 0.1% higher, as average prices at fast food outlets rose 0.1%, average prices at full service restaurants also rose 0.1%, and food prices at employee sites and schools averaged 0.2% higher….

In the food at home categories, the price index for cereals and bakery products was 0.5% higher, even as bread prices fell 0.5%, as the price index for breakfast cereal rose 2.0%, the price index for cookies rose 2.1%, the price index for frozen and refrigerated bakery products, pies, tarts, turnovers rose 1.8% and the price index for fresh cakes and cupcakes was 1.0% higher…at the same time, the price index for the meats, poultry, fish, and eggs food group was 0.1% higher, as the price index for beef and veal rose 0.5%, the price index for ham rose 1.2%, and egg prices were 5.8% higher….on the other hand, the seasonally adjusted price index for dairy products was 0.6% lower, as average milk prices fell 0.2%, the price index for cheese and related products fell 1.1% and the price index for ice cream and related products was 0.9% lower….at the same time, the fruits and vegetables price index was 0.2% lower, as the price index for fresh fruits fell 1.5% and canned fruit prices averaged 0.8% lower….in addition, the beverages price index also 0.2% lower, as the price index for carbonated drinks fell 0.2%, the price index for noncarbonated juices and drinks was 0.5% lower, and the price index for coffee was 1.2% lower….lastly, the price index for the ‘other foods at home’ category was unchanged, as the price index for sugar and and sweets rose 0.9%, the price index for salad dressing rose 1.1%, and the price index for olives, pickles, and relishes rose 1.0%, but the price index for margarine fell 2.2%, the price index for snacks fell 0.7%, and the price index for frozen and freeze dried prepared foods was 1.0% lower…

Among the seasonally adjusted core components of the CPI, which rose by 0.4% in February, after rising by 0.4% in January, by 0.3% in December, by 0.3% in November, by 0.2% in October, by 0.3% in September, by 0.2% in August, and by 0.2% in July, the composite price index of all goods less food and energy goods was 0.1% higher in February, while the more heavily weighted composite for all services less energy services was 0.5% higher….

Among the goods components of the core price index, which will be used by the Bureau of Economic Analysis to adjust October’s retail sales for inflation in national accounts data, the price index for household furnishings and supplies was 0.3% lower, as the price index for tools, hardware and supplies fell 0.6%, the price index for furniture and bedding fell 0.7%, and the major appliance index was 1.3% lower….on the other hand, the apparel price index was 0.6% higher on a 2.6% increase in the price index for women’s dresses, a 6.8% increase in the price index for girls’ apparel, a 2.9% increase in the price index for boys’ and girls’ footwear, and a 5.1% increase in the price index for infants’ and toddlers’ apparel…. meanwhile, the price index for transportation commodities other than fuel was 0.1% higher even as average prices for new vehicles was 0.1% lower, as the price index for used cars and trucks was 0.5% higher, and the price index for vehicle parts and equipment other than tires was also 0.5% higher… in addition, the price index for medical care commodities was also 0.1% higher even as prescription drug prices fell 0.1%, as nonprescription drug prices rose 0.6%, and the price index for medical equipment and supplies was 0.2% higher…on the other hand, the recreational commodities index was 0.2% lower, as the price index for video equipment other than televisions fell 1.1%, the price index for toys fell 0.9%, the price index for pet food fell 0.9%, the price index for sporting goods including bicycles fell 1.0%, and the price index for recreational books was 3.7% lower…however, the education and communication commodities index was 0.2% higher on a 0.7% increase in the price index for computers, peripherals, and smart home assistants, and a 3.6% increase in the price index for computer software and accessories …lastly, a separate price index just for alcoholic beverages was unchanged, while the price index for ‘other goods’ was 0.7% higher on a 1.8% increase in the price index for cosmetics, perfume, bath, nail preparations and implements and a 0.9% increase in the price index for cigarettes…

Within core services, the price index for shelter was 0.4% higher, as rents rose 0.5%, homeowner’s equivalent rent was 0.4% higher, prices for lodging away from home at hotels and motels was 0.1% higher and the price index for water, sewers and trash collection was 0.5% higher….however, the price index for medical care services was 0.1% lower, as the price index for physicians’ services fell 0.2%, the price index for outpatient hospital services fell 0.4%, and the price index for inpatient hospital services was also 0.4% lower….on the other hand, the transportation services price index was 1.4% higher, as the price index for car and truck rental rose 3.8%, the price index for airline fares rose 3.6%, the price index for vehicle maintenance and servicing rose 0.6%, and the price index for motor vehicle insurance rose was 0.9% higher…moreover, the recreation services price index was 0.5% higher, as the price index for pet services rose 1.0%, the price index for fees the price index for admission to sporting events rose 1.9%, and the price index for admission to movies, theaters, and concerts was 0.8% higher…at the same time, the price index for education and communication services was also 0.5% higher, as the price index for postage rose 2.3%, the price index for residential telephone services rose 1.2%, and the price index for internet services and electronic information providers was 1.3% higher…lastly, the index for other personal services fell 0.6%, even as the price index for financial services rose 1.7%, as the price index for miscellaneous personal services was 1.3% lower..

Retail Sales rose 0.6% in February After January’s Sales were Revised 0.5% Lower

Seasonally adjusted retail sales increased 0.6% in February after retail sales for January were revised 0.5% lower…the Advance Retail Sales Report for February (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $700.7 billion during the month, which was 0.6 percent (±0.5%) higher than January’s revised sales of $696.7 billion, and 1.5 percent (±0.7 percent) above the adjusted sales in February of last year…January’s seasonally adjusted sales were revised down more than 0.5%, from $700.3 billion to $696.7 billion, while December’s sales were revised 0.3% lower, from $706.2 billion to $704.1 billion; as a result, the December 2023 to January 2024 percent change was revised from down 0.8 percent (±0.5 percent) to down 1.1 percent (±0.4 percent)…..the downward revision to December sales would indicate that nominal 4th quarter personal consumption expenditures will be revised lower at about a $8.4 billion annual rate, which would lower 4th quarter GDP by roughly 0.16 percentage points…estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated sales were up 0.9%, from $637,809 million in January to $643,391 million in February, and that they were up 2.3% from the $629,035 million of sales in February of a year ago..

Included below is the table of the monthly and yearly percentage changes in retail sales by business type taken from the February Census Marts pdf….the first pair of columns below gives us the seasonally adjusted percentage change in sales for each kind of business from the January revised figure to this month’s February “advance” report in the first sub-column, and then the year over year percentage sales change since last February is in the 2nd column…the second double column pair below gives us the revision of the January advance estimates (now called “preliminary”) as of this report, with the new December to January percentage change under “Dec 2023 (r)” (revised) and the January 2023 to January 2024 percentage change as revised in the last column shown…for your reference, our copy of the table of last month’s advance estimate of January sales, before this month’s revisions, is here…

To estimate February’s real personal consumption of goods data for national accounts from this February retail sales report, the BEA will initially use the corresponding price changes from the February consumer price index, which we reviewed above….to estimate what they will find, we’ll first separate out the volatile sales of gasoline from the other totals…from the third line on the above table, we can see that February retail sales excluding the 0.9% increase in sales at gas stations were also up by 0.6%….then, subtracting the figures representing the 0.1% increase in grocery & beverage store sales and the 0.4% increase in food services sales from that total, we find that nominal core retail sales were up by more than 0.6% for the month…since the CPI report showed that the composite price index for all goods less food and energy goods was 0.1% higher in February, we can thus figure that real retail sales excluding food and energy will on average be up by more than 0.5%…..however, the actual adjustment in national accounts data for each of the types of sales shown above will vary by the change in the related price index…for instance, while nominal sales at auto and parts dealers were up 1.6%, the price index for transportation commodities other than fuel was was 0.1% higher, which would suggest that real sales at auto and parts dealers were up by 1.5%…similarly, while nominal sales at clothing stores were 0.5% lower in February, the apparel price index was 0.6% higher, which means that real sales of clothing actually fell around 1.1%, because the 0.5% fewer dollars spent bought 0.6% fewer clothes per dollar..

In addition to figuring the real change in those core retail sales, we should also adjust food and energy retail sales for their price changes separately, as the BEA will do…the February CPI report showed that the food price index was unchanged, with the index for food purchased for use at home unchanged, while prices for food bought to eat away from home (other than at employee sites and schools) were 0.1% higher… thus, as nominal sales at food and beverage stores were up 0.1%, real sales of food and beverages would be also be 0.1% higher in light of flat prices…meanwhile, the 0.4% increase in nominal sales at bars and restaurants, once adjusted for 0.1% higher prices, suggests that real sales at bars and restaurants rose about 0.3% during the month….on the other hand, while sales at gas stations were up 0.9%, there was a 3.8% increase in the retail price of gasoline during the month, which would suggest that real sales of gasoline were down on the order of 2.8%, with a caveat that gasoline stations do sell more than gasoline, and we haven’t accounted for those other sales, or their prices….averaging real sales that we have thus estimated back together, but leaving out real restaurant and bar sales, we can then estimate that the income and outlays report for February would show that real personal consumption of goods rose by nearly 0.3% in February*, after falling by a revised 1.4% in January, after rising by a revised 0.6% in December, and rising 0.4% in November, unrevised…at the same time, the 0.3% increase in real sales at bars and restaurants would slightly boost the growth rate of February’s real personal consumption of services..…*NB: leaving our sales gasoline decrease out of that computation, since it’s most certainly incorrect, would leave real PCE goods up by more than 0.5% for the month, which is probably closer to what it will be…

Industrial Production Rose 0.1% in February After January Revised 0.4% Lower

The Fed’s February report on Industrial production and Capacity Utilization indicated that industrial production was 0.1% higher in February, after falling by a revised 0.5% in January, and after falling by a revised 0.3% in December, which left our industrial output 0.2% lower than in February a year ago….the industrial production index, with the benchmark set for average 2017 production to equal to 100.0, came in at 102.3 in February, after the January index was revised from the 102.6 reported last month to 102.2, the December index was revised but unchanged at 102.7, the November index was revised from the 102.7 reported last month to 103.0, the October index was revised from 102.4 to 102.6, and the September index was revised from 103.2 to 103.3…

The manufacturing index, which accounts for more than 77% of the total IP index, rose by 0.8%, from 98.4 in January to 99.2 in February, after the manufacturing index for January was revised down from 98.6 to 98.4, the manufacturing index for December index was revised up from 99.1 to 99.5, the manufacturing index for November index was revised up from 99.1 to 99.4, and the manufacturing index for October index was revised up from 98.7 to 98.8, leaving the manufacturing index 0.7% below its year ago level….meanwhile, the mining index, which includes oil and gas well drilling, rose 2.2% in a partial recovery from January’s well freeze-offs, from 116.6 in January to 119.2 in February, after the January index was revised down from 117.3, which still left the mining index 1.4% above where it was a year earlier… finally, the utility index, which often fluctuates due to above or below normal temperatures, fell by 7.5% during our record warm February weather, from 98.8 to 93.3, after our colder than normal January’s utility index was revised from 98.7 to 98.8, now up 7.4% from December….with last February’s temperatures also well above normal, the utility index is 0.7% higher than it was a year ago…

This report also includes capacity utilization data, which is expressed as the percentage of our plant and equipment that was in use during the month, and which indicated that seasonally adjusted capacity utilization for total industry was unchanged at 78.3% in February, after capacity utilization for January was revised down from the 78.5% reported last month …capacity utilization of NAICS durable goods production facilities rose from a downwardly revised 74.4% in January rate to 75.1 in February, while capacity utilization for non-durables producers rose to 78.9 from a downwardly revised 79.0% in January.…capacity utilization for the mining sector rose to 93.8% in February from 91.7% in January, which was originally reported as 92.2%, while utilities were operating at 67.8% of capacity during February, down from their revised 73.5% of capacity during January, which was previously reported at 74.2%…for more details on capacity utilization by type of manufacturer, see Table 7: Capacity Utilization: Manufacturing, Mining, and Utilities, which shows the historical capacity utilization figures for a dozen types of durable goods manufacturers, 8 classifications of non-durable manufacturers, mining, utilities, and capacity utilization for a handful of other special categories..

Producer Prices Rose 0.6% in February on Higher Food, Energy, & Transportation Services

The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.6% in February, as the price index for finished wholesale goods rose 1.2% and the price index for final demand for services was 0.3% higher…that followed a 0.3% PPI increase in January, when the price index for finished wholesale goods fell 0.1%, while the price index for final demand for services was 0.5% higher; a 0.1% PPI decrease in December, when the index for prices of wholesale goods was 0.2% lower, while the price index for final demand for services was unchanged; an unchanged PPI reading in November, when the average of prices for wholesale goods was 0.2% lower, while the price index for final demand for services was 0.2% higher; a 0.3% PPI decrease in October, when the weighted average of prices for wholesale goods was 1.2% lower while the price index for final demand for services was 0.1% higher, and an unrevised 0.2% increase in September, when the weighted average of prices for wholesale goods was 0.9% higher and the price index for final demand for services was 0.1% lower….on an unadjusted basis, producer prices are 1.6% higher than a year ago, while the core producer price index, which excludes food, energy and trade services, was up 0.4% for the month, and is still 2.8% higher than it was a year ago…

As noted, the producer price index for final demand for goods was 1.2% higher in February, after being 0.1% lower in January, 0.1% lower in December, 0.2% lower in November, 1.3% lower in October. 0.9% higher in September, 1.7% higher in August, and 0.2% higher in July, and is now up 0.3% from a year ago….the final demand goods price index was up 1.2% in January as the price index for wholesale energy goods was 4.4% higher, after it had fallen 1.1% in January, after falling 0.8% in December, 2.0% in November, and falling 6.4% in October, while the price index for wholesale foods was 1.0% higher, after falling 0.3% in January, being unchanged in December but after rising 0.7% in November, while the index for final demand for core wholesale goods (excluding food and energy) was 0.3% higher, after being 0.3% higher in January…

Wholesale energy prices were up 4.4% in February on a 6.8% increase in wholesale prices for gasoline, a 15.9% increase in wholesale prices for diesel fuel, and a 3.9% increase in wholesale prices for liquefied petroleum gas, while the final demand food price index was 1.0% higher on a 4.9% increase in the wholesale price index for beef and veal, an 8.9% increase in the wholesale price index for fresh and dry vegetables, a 1.1% increase in the wholesale price index for dairy products, and a 55.0% increase in the wholesale price index for eggs for fresh use….among core wholesale goods, the wholesale price index for industrial chemicals rose 1.9%, the wholesale price index for pumps, compressors, and equipment increased 1.0%, the wholesale price index for cosmetics and other toiletries rose 0.9%, and wholesale price index for cigarettes was 2.6% higher…

Meanwhile, the price index for final demand for services was 0.3% higher in February, after being 0.5% higher in January, being unchanged in December, 0.2% higher in November, 0.1% higher in October, but 0.1% lower in September, 0.2% higher in August, and 0.8% higher in July, and is now 2.3% higher than a year ago…the price index for final demand for trade services fell 0.3%, but the price index for final demand for transportation and warehousing services rose 0.9%, and the core index for final demand for services less trade, transportation, and warehousing services was 0.5% higher….

Among trade services, seasonally adjusted margins for computer hardware, software, and supplies retailers fell 8.5%, margins for automobile retailers fell 3.5%, margins for sporting goods and boat retailers fell 3.1%, and margins for chemicals and allied products wholesalers fell 6.4%, but margins for major household appliances retailers rose 6.6%….among transportation and warehousing services, average margins for airline passenger services rose 2.4% and margins for courier, messenger, and U.S. postal services rose 1.3%….among the components of the core final demand for services index, the price index for consumer loans (partial) rose 3.4%, the price index for traveler accommodation services rose 3.8%, the price index for dental care rose 1.9%, and the price index for health and medical insurance increased 1.4%…

This report also showed the price index for intermediate processed goods was 0.2% lower in February, after being 0.1% lower in January, 0.4% lower in December, 0.7% lower in November and 1.0% lower in October, but after rising 0.5% in September and by 2.0% in August….the price index for intermediate energy goods rose 6.2% in February as refinery prices for gasoline rose 6.8%, refinery prices for diesel fuel rose 15.9%, refinery prices for jet fuel rose 11.5%, the price index for commercial electric power rose 2.4%, and the price index for natural gas to electric utilities rose 7.2%… at the same time, the price index for intermediate processed foods and feeds rose 0.3%, as the producer price index for meats rose 2.2%, the producer price index for refined sugar and byproducts rose 9.1%, and the producer price index for dairy products rose 1.1%….in addition, the core price index for intermediate processed goods less food and energy goods was 0.5% higher, as the producer price index for plastic resins and materials rose 1.7%, the producer price index for steel mill products rose 2.9%, the producer price index for ball and roller bearings rose 3.6%, and the producer price index for primary nonferrous metals rose 3.6%, while the producer price index for softwood lumber fell 3.0%….average prices for intermediate processed goods are still 1.8% lower than in February 2023, the twelfth consecutive year over year decrease, and are thus way down from their 26.6% year over year increase of November 2021, which had been a 46 year high…

Meanwhile, the price index for intermediate unprocessed goods rose 1.2% in February, after rising 1.4% in January, falling 4.2% in December, 2.1% in November and by 1.6% in October, after rising 2.9% in September, 2.1% in August and 2.5% in July….that was as the February price index for crude energy goods rose 3.6%, as crude oil prices rose 7.5%, while unprocessed natural gas prices fell 7.2%, and coal prices were 0.6% lower…in addition, the price index for unprocessed foodstuffs and feedstuffs was 0.8% higher, on a 35.6% increase in producer prices for slaughter hogs, a 2.0% increase in producer prices for slaughter chickens, a 1.6% increase in producer prices for slaughter cattle, and an 8.9% increase in producer prices for oilseeds…on the other hand, the index for core raw materials other than food and energy materials was 1.7% lower on a 4.4% decrease in the price index for iron and steel scrap, a 0.9% decrease in the price index for iron ores, and a 1.0% decrease in the price index for nonferrous metal ores….this raw materials price index is still 8.3% lower than a year ago, the thirteenth negative print after twenty-seven consecutive year over year increases, which came after the annual change on this index had been negative from the beginning of 2019 through October of 2020…

Lastly, the price index for services for intermediate demand was 0.1% higher in February, after being 0.7% higher in January, 0.4% higher in December, and 0.5% higher in November, but after being unchanged in October, 0.3% higher in September, 0.1% lower in August, and 0.7% higher in July….the price index for intermediate trade services fell 0.5%, as margins for intermediate chemicals and allied products wholesalers fell 6.4%, margins for intermediate paper and plastics products wholesalers fell 3.5%, and margins for metals, minerals, and ores wholesalers fell 2.9%….on the other hand, the index for transportation and warehousing services for intermediate demand was 1.1% higher, as the intermediate price index for the U.S. Postal Service rose 3.2%, the intermediate price index for arrangement of freight and cargo rose 7.1%, the intermediate price index for transportation of passengers rose 2.4%, and the intermediate price index for water transportation of freight was 1.7% higher…at the same time, the core price index for intermediate services other than trade, transportation, and warehousing services was 0.1% higher, as the intermediate price index for radio advertising time sales rose 7.7%, the intermediate price index for investment banking rose 3.3%, the intermediate price index for business loans rose 2.9%, and the intermediate price index for traveler accommodation services rose 3.8%…over the 12 months ended in February, the year over year price index for services for intermediate demand is still 3.2% higher than it was a year ago, the forty-first consecutive annual increase in this index change after it briefly turned negative year over year at the onset of the pandemic, from April to August of 2020, even as it is still much lower than the record 9.5% year over year increase indicated for July 2021…

January’s Business Sales Down 1.3%, Business Inventories Unchanged

After the release of the February retail sales report, the Census Bureau released the composite Manufacturing and Trade, Inventories and Sales report for January (pdf), which incorporates the revised January retail data from that February report and the earlier published January wholesale and factory data to give us a complete picture of the business contribution to the economy for that month….according to the Census Bureau, total manufacturer’s and trade sales were estimated to be valued at a seasonally adjusted “$1,833.3 billion, down 1.3 percent (±0.2 percent) from December 2023 and was down 1.2 percent (±0.4 percent) from January 2023“…note that total December sales were concurrently revised up from the originally reported $1,863.6 billion to $1,856.7 billion, now unchanged from November, revised from a 0.4% increase…. manufacturer’s sales fell 1.0% in January, and retail trade sales, which exclude restaurant & bar sales from the revised January retail sales reported earlier, fell 1.1%, while wholesale sales fell 1.7%…

meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted “$2,555.0 billion, virtually unchanged (±0.1 percent)* from December 2023, but were up 0.4 percent (±0.5 percent)* from January 2023″....at the same time, the value of end of December inventories was revised from the $2,556.0 billion reported last month to $2,554.8 billion, now up 0.3% from November… seasonally adjusted inventories of manufacturers were estimated to be 0.1% lower than in December, while inventories of retailers were 0.4% higher, while inventories of wholesalers were estimated to be valued 0.4% lower than in December…

For GDP purposes, all these inventories, including retail, will be adjusted for inflation with appropriate component price indices of the producer price index for January, which indicated finished goods prices were 0.1% lower…last week, we looked at real factory inventories with producer price adjustments for goods at various stages of production, and judged the decrease in those inventories would first subtract the 4th quarter increase, and then also subtract the first quarter decrease, from the growth rate of first quarter GDP…also last week, we found that the reverse of January’s real wholesale inventories from the 4th would also reverse that 4th quarter increase and also subtract January’s small decrease from 1st quarter GDP….since the nominal value of retail inventories for January has now been shown to be 0.4% higher, real retail inventories for the month, after the 0.1% finished goods price adjustment, thus would have thus increased by 0.5% from December, after a fourth quarter that saw real retail inventories up sharply…therefore, what is so far a modest real retail inventory increase in the 1st quarter would thus have a modest negative impact on 1st quarter GDP, amounting to the difference between the first quarter increase and the 4th quarter increase…

  

(the above is the synopsis that accompanied my regular sunday morning news links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most of which are picked from the aforementioned GGO posts, contact me…)