holidays saw largest increase in distillates supplies on record; natural gas drilling now at a 40 month high

oil prices were again higher this week, largely on optimistic chatter coming out of the US-China trade talks in Beijing, but finally snapped their longest rally in 9 years when prices fell back for the first time since December 27th during Friday’s session…after rising $2.63 or 5.8% to $47.96 a barrel last week, mostly on news of a big drop in OPEC output, US oil prices for February delivery opened higher and initially jumped to as high as $49.79 a barrel on Monday morning, on Saudi shipment cuts and expectations ahead of US-China trade talks, but later fell back to close just 56 cents higher at $48.52 a barrel, supported by steadier equities marketsoptimism about the trade talks in Beijing again drove prices higher throughout the day on Tuesday, with oil prices finishing $1.26 or 2.6% higher at $49.78 a barrel…oil prices then spiked when the trade talks in Beijing were carried over into an unscheduled third day on Wednesday, with US crude finishing $2.58 or 5% higher at $52.36 a barrel, despite an EIA report showing much bigger-than-expected increases in stockpiles of gasoline and distillatesthat EIA report and concerns about US-China trade talks initially sent oil prices tumbling 1% on Thursday morning, but prices recovered to close 23 cents higher at $52.59 a barrel, its ninth straight day of gains, supported by comments from Fed chairman Powell that lifted stock markets…however, hopes for the longest rally on record were dashed on Friday when worries over a global economic slowdown returned after talks in Beijing broke up without a deal being struck to end the escalating US-China trade war and oil prices fell $1, or 1.9%, to $51.84 per barrel, snapping a 9-session streak of price gains

natural gas prices, meanwhile, ended the week higher on the strength of a Friday rally, but traded near $3 per mmBTU for most of the week as warm weather persisted….after the steepest monthly price drop in 15 years left natural gas prices at $3.044 per mmBTU at the end of last week, a change in the weekend forecast that delayed the arrival of January cold pushed prices 10 cents lower on Monday…natural gas prices then rallied more than 10 cents on a report of lower production on Tuesday, but fell back to close at $2.967 per mmBTU, a gain of just 2.3 cents….a forecast for slightly colder temperatures later in January added 1.7 cents on Wednesday, but even a larger than expected withdrawal of natural gas from storage couldn’t sustain a rally on Thursday, as prices fell back 1.5 cents…however, the forecast cold finally arrived in force on Friday and sent natural gas prices 13 cents higher as they closed the week at 3.099 mmBTU, 5.5 cents higher than the prior week’s close…

the natural gas storage report for the week ending January 4th from the EIA indicated that the quantity of natural gas in storage in the US fell by 91 billion cubic feet to 2,614 billion cubic feet over the week, which left our gas supplies 204 billion cubic feet, or 7.2% below the 2,818 billion cubic feet that were in storage on January 5th of last year, and 464 billion cubic feet, or 15.1% below the five-year average of 3,078 billion cubic feet of natural gas that have typically been in storage heading into the first weekend of January….this week’s 91 billion cubic feet withdrawal from US natural gas supplies was more than the average estimate for a 75 billion cubic feet withdrawal that a Reuters poll had forecast, but it was much less the average of 182 billion cubic feet of natural gas that have been withdrawn from US gas storage during the New Year week in the last 5 years…an all time record 359 billion cubic feet of natural gas were withdrawn from storage during the week ending January 5th of last year, so that large withdrawal obviously impacted the 5 year average, as well as being the reason that our storage deficit from last year fell from 14.3% last week to 7.2% this week…

The Latest US Supply and Disposition of Oil Data from the EIA

this week’s US oil data from the US Energy Information Administration, also reporting on the week ending January 4th, indicated that despite a large increase in our oil imports and a modest drop in our oil exports, the data showed a modest withdrawal of oil from our commercial crude supplies because the unaccounted for crude factor was reversed from that of the prior week …our imports of crude oil rose by an average of 454,000 barrels per day to an average of 7,846,000 barrels per day, after falling by an average of 264,000 barrels per day the prior week, while our exports of crude oil fell by an average of 172,000 barrels per day to an average of 2,065,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 5,781,000 barrels of per day during the week ending January 4th, 626,000 more barrels per day than the net of our imports minus exports during the prior week…over the same period, field production of crude oil from US wells was reportedly unchanged at 11,700,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from wells totaled an average of 17,481,000 barrels per day during this reporting week…

meanwhile, US oil refineries were using 17,566,000 barrels of crude per day during the week ending January 4th, 194,000 fewer barrels per day than the amount of oil they used during the prior week, while over the same period 240,000 barrels of oil per day were reportedly being pulled out of the oil storage in the US….hence, this week’s crude oil figures from the EIA would seem to indicate that our total working supply of oil from net imports, from oilfield production and from storage was 155,000 barrels per day more than what refineries reported they used during the week….to account for that disparity between the supply of oil and the disposition of it, the EIA inserted a (-155,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that is labeled in their footnotes as “unaccounted for crude oil”…since our unaccounted for crude was at +906,000 barrels per day last week, this week’s oil supply and disposition figures would be considered more accurate than last week’s…(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….  

further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to an average of 7,579,000 barrels per day last week, but was still 3.6% less than the 7,863,000 barrel per day average that we were importing over the same four-week period last year….the 240,000 barrel per day increase in our total crude inventories was due to a 240,000 barrel per day addition to our commercially available stocks of crude oil, while the oil stored in our Strategic Petroleum Reserve remained unchanged….this week’s crude oil production was reported unchanged at 11,700,000 barrels per day because the rounded figure for output from wells in the lower 48 states was unchanged at 11,200,000 barrels per day, while a 10,000 barrel per day increase to 505,000 barrels per day in oil output from Alaska was not enough to change the rounded national total…last year’s US crude oil production for the week ending January 5th was at 9,492,000 barrels per day, so this week’s rounded oil production figure was 23.3% above that of a year ago, and 38.8% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016…     

US oil refineries were operating at 96.1% of their capacity in using those 17,566,000 barrels of crude per day during the week ending January 4th, down from last week’s December record 97.2% of capacity, but still the highest capacity utilization rate for the first week of January since 1999….likewise, the 17,566,000 barrels per day of oil that were refined this week were again at a seasonal high for the date for the 28th time out of the past 32 weeks, and 1.4% higher than the 17,323,000 barrels of crude per day that were being processed during the week ending January 5th, 2017, when US refineries were operating at 95.3% of capacity… 

with the decrease in the amount of oil being refined, the gasoline output from our refineries was also lower, falling by 141,000 barrels per day to 9,392,000 barrels per day during the week ending January 4th, after our refineries’ gasoline output had decreased by 611,000 barrels per day during the week ending December 28th…with that decrease in this week’s gasoline output, our gasoline production was the lowest in 50 weeks, and 1.1% lower than the 9,525,000 barrels of gasoline that were being produced daily during the same week last year….at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 28,000 barrels per day to 5,563,000 barrels per day, after that output had increased by 147,000 barrels per day the prior week….despite that decrease, this week’s distillates production was 5.1% higher than the the 5,592,000 barrels of distillates per day that were being produced during the week ending January 5th, 2017…. 

even with the pullback in our gasoline production, our supply of gasoline in storage at the end of the week jumped by 8,066,000 barrels to 248,062,000 barrels by January 4th, the 7th increase in the past 12 weeks, and the largest increase in gasoline inventories since the week ending January 1st, 2016….our gasoline supplies rose this week because our imports of gasoline rose by 236,000 barrels per day to 550,000 barrels while our exports of gasoline fell by 145,000 barrels per day to 727,000 barrels per day, and while the amount of gasoline supplied to US markets rose by 113,000 barrels per day to 8,735,000 barrels per day, after falling by 725,000 barrels per day the prior week….with this week’s increase, our gasoline inventories are again at a seasonal high for the first week of January, 4.5% higher than last January 5th’s level of 237,322,000 barrels, and roughly 5% above the five year average of our gasoline supplies for this time of the year…

with our elevated level of distillates production, our supplies of distillate fuels increased for the 5th time in sixteen weeks, rising by 10,611,000 barrels to 129,431,000 barrels during the week ending January 4th, after our distillates supplies had increased by 9,529,000 barrels during the prior week…this week’s increase was the largest one week increase since the week ending January 2nd, 2015, and the two week increase of 20,140,000 barrels was the largest two week increase on record…our distillates supplies increased this week because the amount of distillates supplied to US markets, a proxy for our domestic demand, fell by 248,000 barrels per day to 2,955,000 barrels per day (after falling by 1,663,000 barrels per day over the course of the prior 2 weeks), and because our imports of distillates rose by 66,000 barrels per day to 261,000 barrels per day, while our exports of distillates rose by 131,000 barrels per day to 1,353,000 barrels per day….but despite this week’s big increase, our distillate supplies were still 2.1% below the 143,088,000 barrels that we had stored on January 5th, 2017, and 5% below the five year average of distillates stocks for this time of the year…   

since our distillate supplies have just seen the largest two week jump on record, we’ll include a graph showing what that looked like..

January 9th 2019 distillates supplies for January 4

the above graph came from a email from John Kemp of Reuters, which might also have been posted on his twitter page, and it shows US distillate fuels inventories in thousands of barrels by “day of the year” for the past ten years, with the past ten year’s range of our distillates supplies on any given day of the year shown in the light blue shaded area, and the running median of our distillates inventory, or the midpoint of the 10 year daily range, traced by the blue dashes over each day of the year…this graph also shows the number of thousands of barrels of distillates we had stored at the end of each week in 2017 traced by a yellow graph, and our distillates supplies for each week of 2018 traced in red…to that red 2018 graph i have added an extension into the week ending January 4th, 2019, to bring his last graph for last year up to date….

notice that within the light blue shaded area that there is a seasonality to distillates supplies, as they’re normally built up during the spring and summer when refineries are running flat out, and then drawn down and consumed during the winter months, when demand for heating oil is greatest…as you can see in yellpw, as recently as February 2017, our distillate supplies were repeatedly setting wintertime record highs, but then fell to below average by summer as our distillate exports increase…then, during this past year, when supplies of distillates should have been increasing during April and May – days 91 to 151 above – as they normally do, they were falling instead, largely because we had been exporting our distillates production at a record pace, and hence our supplies tracked near a 10 year low for most of June and June…so even though distillates supplies recovered somewhat during August, they began falling again in September and, like natural gas, were nearly 10% below their 10 year average heading into winter, when distillates are used as heat oil…so even though our refineries have started producing distillates at a near record pace in the weeks since, and we’ve thus seen the largest two week build on record, at least partially due to the recent mild temperatures, our supplies as of January 4th were still 2.1% below those of a year ago, and 5% below the 5 year average for this time of year…

finally, with this week’s reversal in the unaccounted for crude factor, our commercial supplies of crude oil decreased for fifth time in 6 weeks, falling by 1,680,000 barrels during the week, from 441,418,000 barrels on December 28th to 439,738,000 barrels on January 4th…however, with a run of 10 large weekly increases before the recent smaller decreases, our crude oil inventories are still roughly 8% above the five-year average of crude oil supplies for this time of year, and roughly 30% above the 10 year average of crude oil stocks for the beginning of January, with the disparity between those figures arising because it wasn’t until early 2015 that our oil inventories first rose above 400 million barrels…since our crude oil inventories have largely been rising since this Fall, after falling through most of the past year and a half until then, our oil supplies as of January 4th were thus 4.8% above the 419,515,000 barrels of oil we had stored on January 5th of 2017, while remaining 7.8% below the 479,012,000 barrels of oil that we had in storage on January 6th of 2016, and 2.1% below the 450,956,000 barrels of oil we had in storage on January 8th of 2015..  

This Week’s Rig Count

US drilling activity, as evidenced by the number of drilling rigs active at the end of the week, was unchanged for the week ending January 11th, as drilling for oil decreased, likely in light of recently depressed oil prices and a 6.7 month backlog of uncompleted wells, while drilling for natural gas increased, likely reflecting the high natural gas prices of several weeks ago, when this week’s drilling work was being contracted… Baker Hughes reported that the total count of rotary rigs running in the US remained at 1075 rigs over the week ending January 11th, which was still 136 more rigs than the 939 rigs that were in use as of the January 12th report of 2018, but down from the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, which was the week before OPEC announced their attempt to flood the global oil market…  

the count of rigs drilling for oil fell by 4 rigs to 873 rigs this week, which was still 121 more oil rigs than were running a year ago, while it remained well below the recent high of 1609 rigs that were drilling for oil on October 10, 2014…at the same time, the number of drilling rigs targeting natural gas bearing formations increased by 4 rigs to 202 natural gas rigs, which was also 15 more rigs than the 182 natural gas rigs that were drilling a year ago, but way down from the modern high of 1,606 natural gas targeting rigs that were deployed on August 29th, 2008…however, this week marked the first time that​ active natural gas rigs have topped 200 since September 4th, 2015….

a rig that had been drilling from a platform in the Gulf of Mexico offshore from Louisiana was shut down this week, which reduced the Gulf of Mexico rig count to 21 rigs for th​is​​report, which was still 2 rigs more than the 19 rigs deployed in the Gulf of Mexico a year ago at this time…since there is still no other offshore drilling off either coast or off Alaska at this time, nor was there during the same week of 2017-18, those Gulf of Mexico totals are identical to the US totals…in addition to the rig offshore from Louisiana being idled, a rig drilling from a platform on Louisiana inland waters was also shut down this week, leaving two such “inland waters” rigs operating there, still up from the one inland waters rig active a year ago…

the count of active horizontal drilling rigs increased by 3 rigs to 948 horizontal rigs this week, which was also 143 more horizontal rigs than the 805 horizontal rigs that were in use in the US on January 12th of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014….in addition, the vertical rig count increased by 1 rig to 65 vertical rigs this week, which was also up from the 62 vertical rigs that were in use during the same week of last year…on the other hand, the directional rig count decreased by 4 rigs to 62 directional rigs this week, which was also down from the 72 directional rigs that were operating on January 12th of 2018…

the details on this week’s changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes…the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas basins…in both tables, the first column shows the active rig count as of January 11th, the second column shows the change in the number of working rigs between last week’s count (January 4th) and this week’s (January 11th) count, the third column shows last week’s January 4th active rig count, the 4th column shows the change between the number of rigs running on Friday and those running before the equivalent weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 12th of January, 2018…   

January 11 2019 rig count summary

while the Permian basin saw a one rig increase, the net change in the Texas Permian basin was a decrease, as two rigs were added to Texas Oil District 8, ​which is ​the core Permian Delaware, while 3 rigs were pulled out of Texas Oil District 7C, or the southern​ portion of the​ Permian Midland…meanwhile, the Permian Delaware that extends into New Mexico saw the addition of two rigs, netting an increase of one for the entire basin…meanwhile, the 4 rig increase in the Marcellus, 2 in Pennsylvania and 2 in West Virginia, accounts for this week’s natural gas rig increase by itself; however, natural gas rigs were also added in Ohio​’s​ Utica and northern Louisiana’s Haynesville, as two natural gas rigs that had been drilling in basins not tracked separately by Baker Hughes were concurrently pulled out…since the natural gas rig increases that are evident ​above account for an increase of 6 horizontal rigs, we know that 3 horizontal rig​s​ must have been shut down elsewhere…two of those obviously had been drilling in Oklahoma’s Cana Woodford, but even those were partially offset by the Permian increase…so there must have been 2 horizontal rigs pulled out of basins not tracked separately by Baker Hughes…with no unaccounted for changes in other states, it would seem those would have had to be in Oklahoma, unless we had a masked rig switch elsewhere, such as a horizontal rig pulled out of a state while a vertical rig was added, which would appear as a goose-egg in the summary tables…

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December’s consumer price index; November’s Mortgage Monitor and job openings & turnover survey

Major reports that were released this past week included the December Consumer Price Index and the Job Openings and Labor Turnover Survey (JOLTS) for November, both from the Bureau of Labor Statistics, which had funding prior to the government shutdown…major reports which were scheduled this week which were postponed due to department furloughs included the Full Report on Manufacturers’ Shipments, Inventories and Orders for November from the Census Bureau, which had been scheduled for Monday, the  November report on our International Trade from the Commerce Department, which had been scheduled for Tuesday, and the Census report on Wholesale Trade, Sales and Inventories for November, which had been scheduled for Thursday….however, the Federal Reserve, which is self-funded, released the Consumer Credit Report for November on Tuesday…that report showed that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $22.2 billion, or at a 6.7% annual rate, as non-revolving credit expanded at a 7.1% rate to $2937.0 billion and revolving credit outstanding grew at a 5.5% rate to $1,042.2 billion…

Privately issued reports released this week included the December Non-Manufacturing Report On Business; which saw the NMI (non-manufacturing index) come in at 57.6%, down from 60.7% in November, indicating that a smaller plurality of service industry purchasing managers reported expansion in various facets of their business in December than did in November, and the Mortgage Monitor for November (pdf) from Black Knight Financial Services, which reported that 3.71% of all US mortgages were delinquent in November, up from 3.64% in October but down from 4.55% in November a year ago, and that 0.52% of all mortgages were in the foreclosure process at the end of the month, the same percentage as in October, but down from the 0.66% of mortgages that were in foreclosure in November a year ago…

Since it’s been more than two years since we’ve looked at any of the metrics from the Mortgage Monitor, we’ll include below an abbreviated portion of the Mortgage Monitor summary table, showing the monthly count of active home mortgage loans and their delinquency status, which comes from page 22 of the pdf

November 2018 mortgage monitor loan count summary table

The columns in the table above show the total active mortgage loan count nationally for each month given, number of mortgages that were delinquent by more than 90 days but not yet in foreclosure, the monthly count of those mortgages that are in the foreclosure process (FC), the total non-current mortgages, including those that just missed one or two house payments, and then the number of foreclosure starts for each month over the past year and for each January shown going back to January 2005….in the last two columns, we see the average length of time that those who have been more than 90 days delinquent have remained in their homes without foreclosure, and then the average number of days those in foreclosure have been stuck in that process because of the lengthy foreclosure pipelines, especially in judicial states…the average length of delinquency for those who have been more than 90 days delinquent without foreclosure has continued falling from the April 2015 record of 536 days and is now at 397 days, while the average time for those who’ve been in foreclosure without a resolution is now at 859 days, down from the record high of 1061 days that was set in August 2015…considering that foreclosure starts have been averaging around 45,000 a month while the number of those that remain in the foreclosure process has been around 268,000, it appears that foreclosures started in recent months are typically being resolved in a period of less than 6 months (180 days)..…hence, for the average time for mortgages to be in the foreclosure process to still be as high as 859 days, some foreclosures started early in the mortgage crisis must still not yet be completed…there’s got to be a story about those mortgages, but i haven’t seen anyone in the media address it for several years..

December Consumer Prices down 0.1% as Lower Gasoline Prices Offset Higher Food and Rents

The consumer price index decreased by 0.1% in December, as somewhat higher prices for food and shelter were more than offset by much lower prices for gasoline… the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the seasonally adjusted price index fell 0.1% in December after it had been statistically unchanged in November, risen 0.3% in October, 0.1% in September, 0.2% in August, 0.2% in July, 0.1% in June, 0.2% in May, 0.2% in April but after falling 0.1% in March after it had risen by 0.2% in February, 0.5% in January, and by 0.1% last December…the unadjusted CPI-U index, which was set with prices of the 1982 to 1984 period equal to 100, fell from 252.038 in November to 251.233 in December, which still left it statistically 1.9102% higher than the 246.524 index reading in December of last year, which is reported as a 1.9% year over year increase….with lower gasoline prices the primary reason for the drop in the overall index, seasonally adjusted core prices, which exclude food and energy, rose by 0.2% for the month, even though the unadjusted core price index also fell from 259.105 to 259.083, which left the core index 2.179% ahead of its year ago reading of 253.558, which is reported as a 2.2% year over year increase, same as the annual increase reported a month ago..

The volatile seasonally adjusted energy price index fell by 3.5% in December, after falling 2.2% in November, rising by 2.4% in October, falling by 0.5% in September, rising by 1.9% in August, falling by 0.3% in July and by 0.3% in June, rising by 0.9% in May and by 1.4% in April, falling by 2.8% in March, rising by 0.1% in February and by 3.0% in January, and thus is now 0.3% lower than in December a year ago…the price index for energy commodities was 7.4% lower in December, while the index for energy services rose by 1.8%, after rising by 0.3% in November…the energy commodity index was down 7.4% due to a 7.5% decrease in price of gasoline, the largest component, and an 11.4% decrease in the index for fuel oils, while prices for other energy commodities, such as propane, kerosene, and firewood, averaged 1.3% lower…within energy services, the index for utility gas service rose 5.6% after falling by 0.7% in November and is now 2.3% higher than it was a year ago, while the electricity price index was 0.7% higher, after it had risen 0.3% in November….energy commodities are now 1.8% lower than their year ago levels, with gasoline prices averaging 2.1% lower than they were a year ago, while the energy services price index is now 1.4% higher than last December, as electricity prices have also increased by 1.1% over that period…

The seasonally adjusted food price index was 0.4% higher in December, after rising 0.2% in November, falling 0.1% in October, being unchanged in September, rising 0.1% in August, 0.1% in July, 0.2% in June, after being unchanged in May, rising 0.3% in April, 0.1% in March, being unchanged in February, rising 0.2% in January, and 0.2% in December of last year, and after being unchanged in October and November of 2017, as the price index for food purchased for use at home rose 0.4% in December, while the index for food bought to eat away from home was also 0.4% higher, as prices at fast food outlets rose 0.4% and prices at full service restaurants rose 0.5%, while food prices at employee sites and schools averaged 0.2% lower…

In the food at home categories, the price index for cereals and bakery products was 0.4 higher as average bread prices rose 1.2%, cereal prices rose 1.3%, and cake and cupcake prices rose 1.0%….on the other hand, the price index for the meats, poultry, fish, and eggs group was unchanged, as the beef and pork indexes both rose just 0.1% and the seafood index rose 0.7% while egg prices were 2.9% lower…at the same time, the seasonally adjusted index for dairy products was 0.3% higher, even though unadjusted milk prices fell 0.5%…meanwhile, the fruits and vegetables index was 1.7% higher on a 1.9% increase in the price index for fresh fruits and a 2.6% increase in the price index for fresh vegetables, which included a 14.5% jump in prices for lettuce….at the same time, the beverages index was 0.3% higher, as carbonated drink prices rose 0.3% and roast coffee prices rose 1.1%…lastly, the index for the ‘other foods at home’ category was 0.3% lower, as both sugar and margarine prices fell 1.4% and average prices for snacks fell 1.9%….the itemized list for price changes in over 100 separate food items is included at the beginning of Table 2 for this release, which gives us a line item breakdown for prices of more than 200 CPI items overall…since last December, just lettuce, which is now priced 15.0% higher than a year ago, is the only ‘food at home’ line item that has seen prices change by more than 10% over the past year…

Among the seasonally adjusted core components of the CPI, which rose by 0.2% in December after rising by 0.2% in November, 0.2% in October, 0.1% in September, by 0.1% in August, 0.2% in July, 0.2% in June, 0.2% in May, 0.1% in April, 0.1% in March, 0.2% in February, 0.3% in January, and by 0.3% last December, the composite price index of all goods less food and energy goods was 0.1% higher, while the composite for all services less energy services was 0.3% higher….among the goods components, which will be used by the Bureau of Economic Analysis to adjust December retail sales for inflation in national accounts data, the index for household furnishings and supplies decreased by 0.1%, as the price index for laundry appliances fell 1.5% while the price index for window and floor coverings was 1.4 % lower…meanwhile, the apparel price index was unchanged, as a 1.3% decrease in the index for men’s apparel was offset by a 1.1% increase in the index for boy’s apparel and a 0.5% increase in the index for women’s apparel…at the same time, the price index for transportation commodities other than fuel was also unchanged, as prices for both new and used cars fell 0.2% while tire prices rose 1.0% and the index for oil, coolant, and fluids rose 1.3%…on the other hand, prices for medical care commodities were 0.2% lower as prescription drugs prices fell 0.4%, while the recreational commodities index rose 1.3% on a 6.7% increase in the index for sports vehicles including bicycles and a 1.4% increase in the index for toys, games, hobbies and playground equipment…in addition, the education and communication commodities index was 0.7% higher after falling 1.3% in November and 1.5% in October, on a 1.4% increase in the index for personal computers and peripheral equipment and a 1.1% increase in the index for educational books and supplies…lastly, a separate price index for alcoholic beverages was unchanged, while the price index for ‘other goods’ fell 0.4% on a 1.4% decrease in the price index for miscellaneous personal goods…

Within core services, the price index for shelter rose 0.3% on a 0.3% increase in rents, a 0.2% increase in homeowner’s equivalent rent, and a 3.1% increase in lodging away from home at hotels and motels, while the shelter sub-index for water, sewers and trash collection rose 0.3%, and other household operation costs were on average 2.0% higher….the price index for medical care services was up by 0.4%, as both hospital inpatient services and hospital outpatient services rose 0.6% and health insurance rose 1.3%…on the other hand, the transportation services index was down by 0.2% as vehicle repair costs fell 0.7% and airline fares fell 1.5%…at the same time, the recreation services price index was 0.3% higher as cable and satellite television service rose 0.6% and admission to sporting events jumped 4.9%….meanwhile, the index for education and communication services was 0.1% higher as tuitions rose 0.2% and child care and nursery school costs rose 0.4%….lastly, the index for other personal services was up 0.2% as haircuts rose 0.4% and apparel services other than laundry and dry cleaning rose 0.8%…among core line items, prices for televisions, which are now 18.6% cheaper than a year ago, and the price index for telephone hardware, calculators, and other consumer information items, which is down by 11.2% since last December, have both seen prices drop by more than 10% over the past year, while the price index for laundry equipment, which has still increased 13.2% year over year, and the price index for boy’s apparel, which is up 13.1% since last December, have both seen prices rise by a double digit magnitude over that span…

Job Openings, Hiring & Quitting Decreased In November, Layoffs were Little Changed

The Job Openings and Labor Turnover Survey (JOLTS) report for November from the Bureau of Labor Statistics estimated that seasonally adjusted job openings decreased by 243,000, from 7,131,000 in October to 6,888,000 in November, after October job openings were revised 52,000 higher, from 7,079,000 to 7,131,000…November’s jobs openings were still 16.1% higher than the 5,931,000 job openings reported in November a year ago, as the job openings ratio expressed as a percentage of the employed fell to 4.4% in November from 4.5% October, but it was still up from 3.9% in November a year ago….the largest percentage decrease in November openings was a 39,000 job opening decrease to 90,000 openings in the real estate, rental and leasing jobs sector, while the transportation, warehousing, and utilities sector saw job openings increase by 40,000 to 298,000 (see table 1 for more job openings details)…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 November, seasonally adjusted new hires totaled 5,710,000, down by 218,000 from the revised 5,928,000 who were hired or rehired in October, as the hiring rate as a percentage of all employed fell to 3.8% in November from 4.0% October, while it was still up from 3.7% in November a year ago (details on hiring by region and by sector since July are in table 2)….meanwhile, total separations fell by 114,000, from 5,621,000 in October to 5,507,000 in November, as the separations rate as a percentage of the employed fell from 3.8% to 3.7%, while it was still up from 3.6% in November a year ago (see table 3)…subtracting the 5,507,000 total separations from the total hires of 5,710,000 would imply an increase of 203,000 jobs in November, a bit more than the revised payroll job increase of 176,000 for November reported in the December establishment survey last week, but still within the expected +/-115,000 margin of error in these incomplete samplings

Breaking down the seasonally adjusted job separations, the BLS finds that 3,407,000 of us voluntarily quit our jobs in November, down by 108,000 from the revised 3,519,000 who quit their jobs in October, while the quits rate, widely watched as an indicator of worker confidence, remained unchanged at 2.3% of total employment, while it was up from 2.2% a year earlier (see job quitting details in table 4)….in addition to those who quit, another 1,769,000 were either laid off, fired or otherwise discharged in November, up by 8,000 from the revised 1,761,000 who were discharged in October, as the discharges rate remained unchanged at 1.2% of total employment, which was also the same as the discharges rate of 1.2% in November a year ago….meanwhile, other separations, which includes retirements and deaths, were at 332,000 in November, down from 341,000 in October, for an ‘other separations rate’ of 0.2%, which was the same rate as in October and as in November 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 easily using the links to tables at the bottom of the press release

 

 (the above is the synopsis that accompanied my regular sunday morning 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 picked from the aforementioned GGO posts, contact me…)      

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graphs and tables for January 12th

rig count summary:

January 11 2019 rig count summary

distillate supplies:

January 9th 2019 distillates supplies for January 4

oil & product inventories:

January 10 2019 inventories as of January 4

delinquent and foreclosed loan counts:

November 2018 mortgage monitor loan count summary table

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natural gas prices see steepest monthly drop in 15 years; Christmas week natural gas withdrawal is smallest in 13 years

oil prices rebounded into the new year, rising every day this week, largely on news of a drop in OPEC output and hints of progress on resolving the U.S.-China trade imbroglio…after falling 0.6% to $45.33 a barrel in volatile trading that saw prices drop as low as $42.36 a barrel last week, prices of US oil for February delivery initially rallied nearly 2% on Monday on comments from both the US and Chinese presidents indicating progress in trade talks, but later fell back to close with a gain of just 8 cents at $45.41 a barrel, thus ending 2018 down nearly 25 percent, the first annual decline since 2015…after opening the new year higher, oil prices then slid to as low as $44.35 on Wednesday morning, before staging a rally that lifted prices from near session lows of $44.50 to $46.50 in the matter of a minute, likely on a report that OPEC’s oil output plunged by the most in almost two years, and then rose to as high as $47.78 a barrel, before falling back to settle with a gain for the day of $1.13 at $46.54 a barrel, weighed down by concerns of a slowing global economyoil prices were higher again in choppy trade on Thursday, first rising to $47.49 and then falling back to $45.35, before ending with a gain of 55 cents at $47.09 a barrel, as concerns about slowing economic growth and a glut of crude were offset by Saudi output cuts and weakness in the US dollar…oil prices rose to as high as $49.22 ​a barrel ​on Friday, supported by a drop in the oil rig count, on news that vice-ministerial trade talks between the US and China had been scheduled for next week, but again fell back late to close with a gain of just 87 cents at $47.96 a barrel, with gains capped by an EIA report of large increases in refined product inventories…US oil prices thus​ ended​ 5.8% higher on the week, their biggest weekly increase since August, while the international benchmark of Brent crude for March ended the week $3.85 or 7.2% higher at $57.06, its largest gain in more than two years

meanwhile, natural gas prices fell for the 5th week in a row as warm weather persisted and the the EIA reported the smallest Christmas week withdrawal in the modern record…prices of natural gas for February delivery fell 36.3 cents to $2.94 per mmBTU on Monday, trading below $3 per mmBTU for the first time since September…hence, natural gas finished the month of December down 36.3%, the sharpest monthly drop since March of 2003, and yes, a 36.3 cent drop on Monday did result in prices 36.3% lower than a month earlier…natural gas prices were then pretty much flat over the first two trading days of the new year, inching up 1.8 cents on Wednesday, but falling back 1.3 cents on Thursday, before rallying 9.9 cents or 3.3% on Friday to close the week at $3.044 per mmBTU, on the risk of colder weather come the 3rd week of January

with that near​ly​ historic drop in natural gas prices, we’ll include a graph of the recent price trajectory, to show you what that looked like..

January 5 2019 natural gas prices

the above graph is a Saturday afternoon screenshot of the interactive US natural gas price graph at Daily FX, an online platform that provides trading news, charts, indicators and analysis of the markets…each bar on the above graph represents natural gas prices for a day of trading between mid August of 2018 and Friday of this week, wherein the green bars represent the days when the price of natural gas went up, and red bars represent the days when the price of natural gas went down…for green bars, the starting natural gas price at the beginning of the day is at the bottom of the bar and the price at the end of the day is at the top of the bar, while for red or down days, the starting price is at the top of the bar and the price at the end of the day is at the bottom of the bar…also visible on this “candlestick” style graph are the faint grey “wicks” above and below each bar, to indicate trading prices during the day that were above or below the opening to closing price range for that day…you can see that before October, natural gas prices had stayed below $3 per mmBTU, and it was only when the possibility of a wintertime natural gas shortage became widely known that prices began to move ​higher…then prices shot up to nearly $5 when November turned cold, and withdrawals of gas from storage were much above normal…now, with the milder temperatures and smaller withdrawals from storage of the past few weeks, the ​natural gas traders are thinking that the crisis has past, and hence natural gas prices ​have fallen back to their previous baseline…

the natural gas storage report for the week ending December 28th from the EIA showed that the quantity of natural gas in storage in the US fell by 20 billion cubic feet to 2,705 billion cubic feet over the week, which left our gas supplies 450 billion cubic feet, or 14.3% below the 3,155 billion cubic feet that were in storage on December 29th of last year, and 560 billion cubic feet, or 17.2% below the five-year average of 3,265 billion cubic feet of natural gas that are typically in storage ​going into the last weekend of December….this week’s 20 billion cubic feet withdrawal from US natural gas supplies was much less than the 44 billion cubic feet to 47 billion cubic feet withdrawal that major surveys had forecast, and it was way below the average of 107 billion cubic feet of natural gas that have been withdrawn from US gas storage during the fourth week of December in the last 5 years…at it turns out, this week’s withdrawal was​ also​ the smallest Christmas week withdrawal since 2005..

for a visualization of what this week’s natural gas withdrawal looks like historically, we have a graphic showing this year’s weekly change in natural gas inventories as compared to last year’s and to the long term averages: 

January 5th 2019 change in natural gas inventories for Dec 28

the above graph was copied from a blog post at Bespoke Weather that was published on Friday of this week, ​shortly ​after the holiday postponed release of the natural gas storage report…on this graph, the dark blue ​graph ​shows this year’s weekly additions to natural gas storage in billions of cubic feet above the zero line, and this year’s weekly withdrawals from natural gas storage in billions of cubic feet below the zero line; similarly, weekly additions and withdrawals of natural gas in 2017 are shown in red, the 5 year average weekly change of natural gas in storage is shown in green, and the historical average weekly change of natural gas supplies in EIA data going back to 1992 is shown in orange…at the far left, you can see the record withdrawal of 359 billion of cubic feet during the first week in January of this year, and a withdrawal of 288 billion cubic feet during the third week of January 2018 that would have also been a record withdrawal if not for the first week; those 2 big withdrawals thus dropped our natural gas supplies to 17.5% below normal to start the year, a deficit which persisted throughout the summer, despite near normal additions to storage….in the week ending November 16th, you can see the big blue spike down that represented the largest drop in our supplies ever in mid-November, which came after our natural gas supplies had already started the winter at a 15 year low…then, two weeks ago, there was also a large withdrawal, but as you can see, by that time the 5 year average withdrawal was already near that level for mid-December…now we have had two much smaller than normal withdrawals of gas from storage, with this recent week showing the smallest Christmas​-week​ withdrawal since 2005​; contrast that with Christmas week of last year (shown in red), when 193 billion cubic feet ​of natural gas were​ needed from storage to meet demand​…while the past two weeks​ of low withdrawals​ have certainly taken the pressure off​ supplies​,​ ​we aren’t completely out of the woods yet, since our gas stores are still more than 17% below recent averages, ​but barring a real frigid January, we should be able to make it through the winter with the supplies we now have on hand..

The Latest US Oil Supply and Disposition Data from the EIA

this week’s US oil data from the US Energy Information Administration, reporting on the week ending December 28th, indicated a big pickup in oil refining coupled with a modest decrease in our oil imports and a big drop in our oil exports, which together meant our commercial crude supplies remained statistically unchanged for the second week in a row…our imports of crude oil fell by an average of 264,000 barrels per day to an average of 7,392,000 barrels per day, after rising by an average of 233,000 barrels per day the prior week, while our exports of crude oil fell by an average of 732,000 barrels per day to an average of 2,237,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 5,155,000 barrels of per day during the week ending December 28th, 468,000 more barrels per day than the net of our imports minus exports during the prior week…over the same period, field production of crude oil from US wells was reportedly unchanged at 11,700,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from wells totaled an average of 16,855,000 barrels per day during this reporting week…

meanwhile, US oil refineries were using 17,760,000 barrels of crude per day during the week ending December 28th, 410,000 barrels per day more than the amount of oil they used during the prior week, while over the same period 1,000 barrels of oil per day were reportedly being added to the oil that’s in storage in the US….hence, this week’s crude oil figures from the EIA would seem to indicate that our total working supply of oil from net imports and from oilfield production was 906,000 barrels per day short of what refineries reported they used during the week plus what was added to storage….to account for that disparity between the supply of oil and the disposition of it, the EIA inserted a (+90​6,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that is labeled in their footnotes as “unaccounted for crude oil”…with our unaccounted for crude as high as 90​6,000 barrels per day, all of this week’s oil supply and disposition figures that we have cited must therefore be considered questionable…(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….  

further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to an average of 7,466,000 barrels per day, but was still 4.1% less than the 7,789,000 barrel per day average that we were importing over the same four-week period last year….the 1,000 barrel per day increase in our total crude inventories was due to a 1,000 barrel per day addition to our commercially available stocks of crude oil, since the oil stored in our Strategic Petroleum Reserve remained unchanged….this week’s crude oil production was reported unchanged at 11,700,000 barrels per day because the rounded figure for output from wells in the lower 48 states was unchanged at 11,200,000 barrels per day, while a 2,000 barrel per day decrease to 495,000 barrels per day in oil output from Alaska was not enough to change the rounded national total…last year’s US crude oil production for the week ending December 29th was at 9,782,000 barrels per day, so this week’s rounded oil production figure was 19.6% above that of a year ago, and 38.8% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016…     

US oil refineries were operating at 97.2% of their capacity in using those 17,760,000 barrels of crude per day during the week ending December 28th, ​up from last week’s 95.1% of capacity, and the highest December capacity utilization rate on record….the 17,760,000 barrels per day of oil that were refined this week were thus again at a seasonal high for the time of year for the 27th time out of the past 31 weeks, and 0.9% higher than the previous December high of 17,608,000 barrels of crude per day that were being processed during the week ending December 29th, 2017, when US refineries were operating at 96.7% of capacity…  … 

despite the increase in the amount of oil being refined, the gasoline output from our refineries was much lower, decreasing by 611,000 barrels per day to 9,533,000 barrels per day during the week ending December 28th, after our refineries’ gasoline output had decreased by 190,000 barrels per day during the week ending December 21st…with that decrease in this week’s gasoline output, our gasoline production during the week was 1.5% lower than the 9,682,000 barrels of gasoline that were being produced daily during the same week last year….at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 147,000 barrels per day to 5,591,000 barrels per day, after that output had increased by 51,000 barrels per day the prior week….with that increase, this week’s distillates production virtually equal to the the 5,592,000 barrels of distillates per day that were being produced during the week ending December 29th, 2017…. 

even with the pullback in our gasoline production, our supply of gasoline in storage at the end of the week increased by 6,890,000 barrels to 239,996,000 barrels by December 28th, the 6th increase in the past 11 weeks, and enough to finally lift our gasoline supplies back above those of early October….our gasoline supplies rose this week because the amount of gasoline supplied to US markets fell by 725,000 barrels per day to 8,623,000 barrels per day while our exports of gasoline rose by 21,000 barrels per day to 872,000 barrels per day and our imports of gasoline fell by 195,000 barrels per day to 314,000 barrels…with this week’s increase, our gasoline inventories are again at a seasonal high for anytime in December, 2.9% higher than last December 29th’s level of 233,187,000 barrels, and roughly 5% above the five year average of our gasoline supplies for this time of the year…

with the near record production of distillates, our supplies of distillate fuels increased for just the 4th time in fifteen weeks, rising by 9,529,000 barrels to 129,431,000 barrels during the week ending December 28th, after our distillates supplies had increased by a statistically insignificant 2,000 barrels during the prior week…our distillates supplies increased because the amount of distillates supplied to US markets, a proxy for our domestic demand, fell by 1,039,000 barrels per day to 3,203,000 barrels per day (after falling by 644,000 barrels per day the prior week), and because our exports of distillates fell by 184,000 barrels per day to 1,222,000 barrels per day, while our imports of distillates fell by 9,000 barrels per day to 195,000 barrels per day….but despite this week’s big increase, our distillate supplies finished the week 6.8% below the 138,834,000 barrels that we had stored on December 29th, 2017, and remained 7% below the five year average of distillates stocks for this time of the year…   

finally, with the week’s big drop in oil exports largely offset by lower imports and increased refining, our commercial supplies of crude oil rose by a statistically insignificant 7,000 barrels to 441,418,000 barrels on December 28th, from 441,411,000 barrels on December 21st, the first increase in 5 weeks but the 27th ‘up’ week of 2018….with our increases for the year now greater than our decreases, our crude oil inventories were thus roughly 8% above the five-year average of crude oil supplies for this time of year, and over 28% above the 10 year average of crude oil stocks for the last week of December, with the disparity between those figures arising because it wasn’t until early 2015 that our oil inventories first rose above 400 million barrels…however, since our crude oil inventories had been falling through most of the past year and a half until this Fall, our oil supplies as of December 28th​ ​were only 4.0% above the 424,463,000 barrels of oil we had stored on December 29th of 2017, and remained 7.8% below the 479,012,000 barrels of oil that we had in storage on December 30th of 2016, and 2.1% below the 450,956,000 barrels of oil we had in storage on January 1st of 2015..    

This Week’s Rig Count

US drilling activity decreased for the fifth time in seven weeks during the week ending January 4th, as drilling for oil has stagnated in light of depressed oil prices and a 6.7 month backlog of uncompleted wellsBaker Hughes reported that the total count of rotary rigs running in the US decreased by 8 rigs to 1075 rigs over the week ending January 4th, which was still 151 more rigs than the 924 rigs that were in use as of the January 5th report of 2018, but down from the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC announced their attempt to flood the global oil market…  

the count of rigs drilling for oil fell by 8 rigs to 877 rigs this week, which was still 135 more oil rigs than were running a year ago, while it remained well below the recent high of 1609 rigs that were drilling for oil on October 10, 2014…at the same time, the number of drilling rigs targeting natural gas bearing formations was unchanged at 198 natural gas rigs, which was still 16 more rigs than the 182 natural gas rigs that were drilling a year ago, but way down from the modern high of 1,606 natural gas targeting rigs that were deployed on August 29th, 2008… 

two of the rigs that were shut down this week had been drilling from platforms in the Gulf of Mexico, which reduced the Gulf of Mexico rig count to 22 rigs for the week, which was still 5 rigs more than the 17 rigs deployed in the Gulf of Mexico a year ago at this time…since there is no other offshore drilling off either coast or off Alaska at this time, nor was there during the same week of 2017-18, those Gulf of Mexico totals are identical to the US totals..

the count of active horizontal drilling rigs remained unchanged at 945 horizontal rigs this week, which was still 147 more horizontal rigs than the 798 horizontal rigs that were in use in the US on January 5th of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014….on the other hand, the vertical rig count decreased by 4 rig to 64 vertical rigs this week, which was still up from the 62 vertical rigs that were in use during the same week of last year…at the same time, the directional rig count also decreased by 4 rigs to 66 directional rigs this week, which was still up from the 64 directional rigs that were operating on January 5th of 2018…

the details on this week’s changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes…the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas basins…in both tables, the first column shows the active rig count as of January 4th, the second column shows the change in the number of working rigs between last week’s count (December 28th) and this week’s (January 4th) count, the third column shows last week’s December 28th active rig count, the 4th column shows the change between the number of rigs running on Friday and those running on the equivalent weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 5th of January, 2018…  

January 4 2019 rig count summary

in addition to the major producing states shown above, Mississippi also saw 4 rigs shut down this week, leaving 2 rigs active in the state, their lowest count since last January 12th…those 4 from Mississippi, and the 5 rigs pulled out of California, pretty much account for this week’s decrease (the 2 Gulf of Mexico rigs that were shut down come out of Louisiana’s count)…otherwise, i don’t see anything that’s hidden in this table, such as a “no change” masking a gas rig being swapped out for an oil rig, so what the table indicates this week is pretty much what happened…since the basin count above shows an increase of two rigs while the horizontal rig count was unchanged, two horizontal rigs had to have been pulled out of basins not tracked separately by Baker Hughes, ​such as those in California and Mississippi…then there were also 8 ​more ​rigs, 4 vertical and 4 directional, pulled out of those “other” basins not tracked separately by Baker Hughes, for a net decrease of 10 rigs in “other basins”….and all of those changes, including those shown above, were oil rigs; there were no changes to gas rig counts in any state…

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note:  there’s more here

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December’s jobs report, et al

The only major economic report released this week was the Employment Situation Summary for December from the Bureau of Labor Statistics, as apparently the Labor Department had been funded prior to the government shutdown…the November report on Construction Spending from the Census Bureau had been scheduled for release on Thursday, but it has been postponed due to the government funding impasse over funding for Trump’s Mexican border wall…after the 16 day government shutdown of October 2013, all such postponed reports were eventually released, with many of them delayed by more than 2 weeks, so presumably that will be the case again this time…

Meanwhile, with Federal Reserve being self-funded, the Dallas Fed Texas Manufacturing Outlook Survey reported their general business activity composite index fell to -5.1 from last month’s +17.6, the largest drop in their index since 2008 and now indicating a modest contraction of the Texas manufacturing economy…privately issued reports released this week included the ADP Employment Report for December and the December report on light vehicle sales from Wards Automotive, which estimated that vehicles sold at a 17.51 million annual rate in December, up 0.9% from the 17.35 million annual pace of vehicle sales in November but down 1.4% from the 17.76 million vehicle rate reported in December of 2017…in addition, this week saw the release of the widely followed manufacturing purchasing manager’s survey from the Institute for Supply Management (ISM): the December Manufacturing Report On Business reported that the manufacturing PMI (Purchasing Managers Index) fell to 54.1% in December, down from 59.3% in November and the lowest since November 2016, which suggests a much weaker expansion in manufacturing firms nationally..

Employers Add 312,000 Jobs in December, Unemployment Rate Rises to 3.9%

The Employment Situation Summary for December indicated that employers added the most jobs since February, but that the unemployment rate rose due to an increase in those looking for but unable to find work…estimates extrapolated from the seasonally adjusted establishment survey data projected that employers added 312,000 jobs in December, after the previously estimated payroll job increase for November was revised up from 155,000 to 176,000, and the payroll jobs increase for October was revised up from 237,000 to 274,000…that means that this report represents a total of 370,000 more seasonally adjusted payroll jobs than were reported last month, enough to increase the 2018 job increase average to 220,000 jobs per month over the past year….the unadjusted data, however, shows that there were actually 54,000 less payroll jobs extent in December than in November, as the usual seasonal layoffs in areas such as construction and other outdoor services were normalized by the seasonal adjustments to show the job increases indicated..

Seasonally adjusted job changes for December were spread throughout the goods producing and service sectors including government, with the 1,000 jobs lost in the information sector the only decrease noted…employment in health care and social assistance increased by 57,900 jobs during the month, as 13,300 more employees were added by home health care services and 8,300 more were employed by individual and family services…another 55,000 seasonally adjusted jobs were added in the leisure and hospitality sector, with the addition of 48,700 more jobs in bars and restaurants….the broad professional and business services sector, which usually leads in monthly job gains, added 43,000 jobs, with 14,800 of those working for employment services and 17,600 more employed in a variety of professional and technical services….construction work saw a relative job increase of 38,000, as seasonally adjusted employment in heavy and civil engineering construction increased by 16,300 and non-residential specialty trade contractors employed 16,100 more workers than normal for December… in addition, 32,000 more jobs were added by manufacturers, with factories producing fabricated metal products accounting for 6,700 of those…private educational services added 24,100 jobs in December, with no further details as to type of education given…then, after a downward seasonal adjustment, retail sales still added 23,800 more workers, with a 15,000 increase in those working in general merchandise stores offsetting a 9,400 decrease in employment in sporting goods, hobby, book, and music stores… meanwhile, employment in the other major sectors including mining, wholesale trade, transportation and warehousing, utilities, financial activities, and government, all saw smaller job gains over the month..

Boosted by sizable pay increases in the trade, transportation, and utilities sectors, the establishment survey also showed that average hourly pay for all employees rose by 11 cents an hour to $27.48 an hour in December, after it had increased by 6 cents an hour in November; that brought the average pay gain for the year to 84 cents, an increase of 3.2% since last December….meanwhile, the average hourly earnings of production and non-supervisory employees increased by 9 cents to $23.05 an hour…employers also reported that the average workweek for all private payroll employees increased by 0.1 hour to 34.5 hours in December, while hours for production and non-supervisory personnel was unchanged at 33.7 hours…at the same time, the manufacturing workweek increased by 0.1 hour to 40.9 hours, while average factory overtime increased by 0.1 hour to 3.6 hours…

Meanwhile, the December household survey indicated that the seasonally adjusted extrapolation of those who reported being employed rose by an estimated 142,000 to 156,945,000, while the estimated number of those unemployed rose by 276,000 to 6,294,000; which thus meant there was a rounded 419,000 increase in the total labor force…since the working age population had grown by 180,000 over the same period, that meant the number of employment aged individuals who were not in the labor force fell by 237,000 to 95,649,000…with the increase of those in the labor force proportionately larger than the increase in the civilian noninstitutional population, the labor force participation rate rose 0.2%, from 62.9% in November to 63.1% in December….meanwhile, the increase in number employed as a percentage of the increase in the population was nearly stable and left the employment to population ratio, which we could think of as an employment rate, unchanged at 60.6%…at the same time, the relatively large increase in the number considered unemployed was enough to raise the unemployment rate from 3.7% in November to 3.9% in December.. meanwhile, the number of those who reported they were forced to accept just part time work fell by 124,000, from 4,781,000 in November to 4,657,000 in December, which was enough to keep the alternative measure of unemployment, U-6, which includes those “employed part time for economic reasons”, unchanged at 7.6% of the labor force in December…

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 along side the press release to avoid the need to scroll up and down the page..

 

 

(the above is the synopsis that accompanied my regular sunday morning 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 picked from the aforementioned GGO posts, contact me…)      

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table & graphics for January 5th

rig count summary:

January 4 2019 rig count summary

natural gas prices:

January 5 2019 natural gas prices

natural gas inventories:

January 5th 2019 change in natural gas inventories for Dec 28

temperature deviations:

January 5 2019 temperature departure from normal for week to Dec 27

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oil & natural gas prices both down again in volatile trading; warm spell gives natural gas stores a breather..

oil prices ended lower for the 3rd week in a row in quite volatile trading that largely synched with the wild gyrations in wall street markets this week, which in turn were driven by year end tax strategies of hedge funds and institutions rather than any specific economic developments…after falling $5.61 or 11% to $45.59 a barrel, largely on technical factors last week, contract prices of US oil for February delivery plunged another $3.06 or 6.7% to $42.53 a barrel to start the week on Monday, as fears of an economic slowdown rattled global financial markets and drove unrequited selling in light pre-Christmas trading…those fears apparently dissipated over the holiday, as financial markets roared back to their largest gain in history on Wednesday while oil prices shot back up $3.69, or 8.7%, to $46.22 a barrel, their largest daily gain in more than two years…however, as stock indices retreated again on Thursday, so too did crude prices, as they fell $1.61, or 3.5%, to $44.61 a barrel, “giving back some of the gains that were brought along with the euphoria in the stock market“…oil prices then staged a modest rally on Friday, rising 72 cents to $45.33 a barrel, after the weekly EIA inventory data showed a small drop in US crude inventories, in contrast to Thursday API figures that had showed a massive crude supply build…nonetheless, February US crude still finished with a decline of 0.6% for the week, while the global benchmark February Brent crude, which did not participate in the Friday rally, ended the week 3.0% lower at $52.20 a barrel, after having seen a 4.2% drop on Thursday…

natural gas prices, meanwhile, fell for a fourth consecutive week, as unusually warm weather for December continued to reduce demand for natural gas and thus took the edge off the deep supply deficit we started the winter with…quoting natural gas contracts for January delivery to start the week, prices fell 34.9 cents to $3.467 per mmBTU on Monday, as the forecasts for early January cold which had held up prices the prior week had been lifted over the weekend…prices then edged back up 7.6 cents on Wednesday and another 9.9 cents on Thursday as trading in the January gas contract expired at $3.642 per mmBTU…at the same time, natural gas contracts for February delivery, which had ended the prior week priced at $3.750 per mmBTU, fell 32.7 cents on Christmas eve, rebounded 3.5 cents on Wednesday and 8.8 cents on Thursday, and then crashed 24.3 cents to an 8 week low of $3.303 per mmBTU on Friday, as the temperature forecasts again backed off earlier cold forecasts and the EIA reported the smallest withdrawal of natural gas from storage yet this winter….the February natural gas contract price thus ended down nearly 12% for the week, and 13% below where the January natural gas contract had settled the prior Friday….

the natural gas storage report for the week ending December 21st from the EIA showed that the quantity of natural gas in storage in the US fell by 48 billion cubic feet to 2,725 billion cubic feet over the week, which left our gas supplies 623 billion cubic feet, or 18.6% below the 3,348 billion cubic feet that were in storage on December 22nd of last year, and 647 billion cubic feet, or 19.2% below the five-year average of 3,372 billion cubic feet of natural gas that are typically in storage after the third week of December….this week’s 48 billion cubic feet withdrawal from US natural gas supplies was just about what most analysts had been expecting, but it was well below the average of 121 billion cubic feet of natural gas that have been withdrawn from US gas storage during the third week of December in recent years…natural gas storage facilities in the Eastern US saw a 16 billion cubic feet draw from their supplies over the week, half of their average withdrawal over the past five years, as the region’s gas supply deficit was reduced to 14.4% below normal for this time of year, while natural gas supplies in the Midwest fell by 23 billion cubic feet, in contrast to the normal 40 billion cubic feet pull, as their supply deficit was reduced to 12.2% below the normal for the third weekend of December…the South Central region only saw a 2 billion cubic feet drop in their supplies, in contrast to their normal 30 billion cubic foot withdrawal, as their natural gas storage deficit was reduced to 25.5% below their five-year average for this time of year…at the same time, 3 billion cubic feet were pulled out of natural gas supplies in the sparsely populated Mountain region, which normally pulls out 7 billion cubic feet for the week, as their deficit from normal fell to 21.9%, while 4 billion cubic feet were withdrawn from storage in the Pacific region, vs 12 billion cubic feet normally withdrawn, and their natural gas supply deficit fell to 27.4% below normal for this time of year….

so, we’ve just seen our weekly withdrawal drop from 141 billion cubic feet during the week ending December 14th to just 48 billion cubic feet during the current reporting week ending December 21st…as we’ve mentioned several times, natural gas demand and hence withdrawal of gas from storage is largely driven by changes in temperature, relatively steady industrial and export demand notwithstanding…that can be illustrated quite well with a couple graphics we’ve pulled from the EIA’s natural gas storage dashboard and included below; both are similar, with the first showing daily regional average temperatures from November 30th to December 13th, and the second showing daily regional temperatures from December 14th to December 27th:

December 19 2018 average regional temps Nov 30 to Dec 13

December 29 2018 average regional temps Dec 14 to Dec 27

the above graphics from the EIA’s natural gas storage dashboard gives us both the average daily temperature covering the period from November 30th through December 27th in each of the five natural gas regions, and also a color-coded variance from normal for each of those daily temperature averages, with shades of brown indicating the average temperatures in the region were above normal on a given date, while shades of blue indicate average temperatures that were below normal for the date, as indicated in the legend at the bottom….thus this graphic gives us not only the actual average temperature for each region for each day, but also indicates how much that temperature deviated from the norm…as you can see in the first graphic above, temperatures for the heavily populated East, Midwest and South Central regions were generally below normal over the period from December 8th thru December 14th, with the temperatures in the East, which accounts more than a third of the population, consistently averaging in the mid-30s, while temperatures in the Midwest saw average temperatures in the 20s for four days to start the period…that colder than normal period, which included 3 days that were 5 to 9 degrees colder than normal for each of those regions, is what resulted in the 141 billion cubic feet withdrawal from our natural gas supplies over the week ending December 14th, just modestly above the 5 year average withdrawal of 136 billion cubic feet…

now look at the period from December 15th thru December 21st, representing the dates of this week’s report; not only were the temperatures in the East, Midwest and South Central regions above normal for each day during the period, but temperatures for all 5 regions were above normal for every day during the period, with temperatures in the East averaging in the mid-40s, and temperatures in the Midwest averaging in the upper 30s over the period…in fact, except for a few counties on the Gulf Coast, the entire US saw above normal temperatures during the week, with the broad area from the northern Rockies to the Great Lakes all more than 10 degrees above normal, as you can see on the map below, also from the natural gas storage dashboard….overall, we can estimate that temperatures for the lower 48 averaged at least 7 degrees warmer during the week ending December 21st than they were during the week ending December 14th…as a result, the daily production of 87.2 billion cubic feet was nearly adequate to meet the country’s needs, and hence only 48 billion cubic feet, or about 7 billion cubic feet per day, needed to be withdrawn from storage during the week…furthermore, if we look at the daily regional average temperatures over the 6 days beginning December 22 shown above, they too are all above normal, with the small exception of the 30 degree average on December 27th for the mountain states…that means that the coming week’s report for the week ending December 28th will again show a withdrawal from storage much below normal, also serving to alleviate the natural gas deficit which had been running 20% below normal nationally in recent weeks…

December 29 2018 temperature departure from normal for week to Dec 20

The Latest US Oil Supply and Dispostion Data from the EIA

this week’s US oil data from the US Energy Information Administration, reporting on the week ending December 21st, indicated a modest increase in our oil imports and a big jump in our oil exports, while our commercial crude supplies nonetheless remained statistically unchanged, resulting in a large jump in unaccounted for crude….our imports of crude oil rose by an average of 233,000 barrels per day to an average of 7,656,000 barrels per day, after rising by an average of 30,000 barrels per day the prior week, while our exports of crude oil rose by an average of 644,000 barrels per day to an average of 2,969,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 4,687,000 barrels of per day during the week ending December 21st, 411,000 fewer barrels per day than the net of our imports minus exports during the prior week…over the same period, field production of crude oil from US wells reportedly increased by 100,000 barrels per day to 11,700,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from wells totaled an average of 16,387,000 barrels per day during this reporting week…

meanwhile, US oil refineries were using 17,350,000 barrels of crude per day during the week ending December 21st, 58,000 barrels per day less than the amount of oil they used during the prior week, while over the same period ​7,000 barrels of oil per day were reportedly being pulled out of the oil that’s in storage in the US….hence, this week’s crude oil figures from the EIA would seem to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was ​​957,000 barrels per day short of what refineries reported they used during the week….to account for that disparity between the supply of oil and the consumption of it, the EIA inserted a (+957,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that is labeled in their footnotes as “unaccounted for crude oil”…with our unaccounted for crude reaching 957,000 barrels per day, the largest amount in recent history, all of this week’s oil supply and disposition figures ​that we have cited ​must be taken with a big grain of salt…(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….  

further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 7,423,000 barrels per day, now 2.3% less than the 7,598,000 barrel per day average that we were importing over the same four-week period last year….the statistical ​6,000 barrel per day decrease in our total crude inventories included a rounded ​7,000 barrel per day withdrawal from our commercially available stocks of crude oil, while the oil stored in our Strategic Petroleum Reserve remained unchanged….this week’s crude oil production was reported 100,000 barrels per day higher at 11,700,000 barrels per day because the rounded figure for output from wells in the lower 48 states rose by 100,000 barrels per day to 11,200,000 barrels per day, while a 1,000 barrel per day decrease to 497,000 barrels per day in oil output from Alaska was not enough to change the rounded national total…last year’s US crude oil production for the week ending December 22nd was at 9,754,000 barrels per day, so this week’s rounded oil production figure was almost 20% above that of a year ago, and 38.8% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016…     

US oil refineries were operating at 95.1% of their capacity in using th​ose 17,350,000 barrels of crude per day during the week ending December 21st, down from last week’s 95.4% of capacity, but still a high capacity utilization rate for December or for any time of year….the 17,350,000 barrels per day of oil that were refined this week were no longer at a seasonal high for the time of year, however, as they were fractionally lower than the previous seasonal high of 17,398,000 barrels of crude per day that were being processed during the week ending December 22nd, 2017, when US refineries were operating at 95.7% of capacity… 

with the small drop in the amount of oil being refined, the gasoline output from our refineries was also lower, decreasing by 190,000 barrels per day to 10,334,000 barrels per day during the week ending December 21st, after our refineries’ gasoline output had decreased by 123,000 barrels per day during the week ending December 14th…with that decrease in this week’s gasoline output, our gasoline production during the week was 0.8% lower than the 10,222,000 barrels of gasoline that were being produced daily during the same week last year….at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 51,000 barrels per day to 5,444,000 barrels per day, after that output had decreased by 152,000 barrels per day the prior week….even with that increase, this week’s distillates production was fractionally lower than the 5,476,000 barrels of distillates per day that were being  produced during the week ending December 22nd, 2017…. 

even with the pullback in our gasoline production, our supply of gasoline in storage at the end of the week increased by 3,006,000 barrels to 233,106,000 barrels by December 21st, the 5th increase in the past 10 weeks, which​ nonetheless​ still left our gasoline supplies 3,066,000 barrels lower than they were on the 5th of October, at a time of year when gasoline inventories are usually increasing….our gasoline supplies rose this week even though the amount of gasoline supplied to US markets rose by 105,000 barrels per day to 9,348,000 barrels per day while our exports of gasoline fell by 97,000 barrels per day to 851,000 barrels per day and our imports of gasoline fell by 86,000 barrels per day to 509,000 barrels…with this week’s increase, our gasoline inventories are once again at a seasonal high for the third week in December, 2.1% higher than last December 22nd’s level of 228,374,000 barrels, and roughly 4% above the five year average of our gasoline supplies for this time of the year…

even with the ongoing elevated level of our distillates production, our supplies of distillate fuels increased for just the 3rd time in fourteen weeks, but just by a statistically insignificant 2,000 barrels to 119,902,000 barrels during the week ending December 21st, after our distillates supplies had decreased by 4,237,000 barrels during the prior week…our distillates supplies eked out that small increase because the amount of distillates supplied to US markets, a proxy for our domestic demand, fell by 644,000 barrels per day to 4,242,000 barrels per day, while our imports of distillates rose by 65,000 barrels per day to 204,000 barrels per day, and while our exports of distillates rose by 155,000 barrels per day to 1,406,000 barrels per day….despite this week’s increase, our distillate supplies finished the week 7.7% below the 129,935,000 barrels that we had stored on December 22nd, 2017, and roughly 11% below the five year average of distillates stocks for this time of the year…   

finally, with the caveat that oil which was unaccounted for this week approached a million barrels per day, our commercial supplies of crude oil slipped by a statistically insignificant 46,000 barrels to 441,411,000 barrels on December 21st, from 441,457,000 barrels on December 14th, the fourth straight decrease after 10 weekly increases, and the 25th down week during 2018….but even after four straight decreases, our crude oil inventories still remained roughly 7% above the five-year average of crude oil supplies for this time of year, and over 28% above the 10 year average of crude oil stocks for the first week of December, with the disparity between those figures arising because it wasn’t until early 2015 that our oil inventories first rose above 400 million barrels…however, since our crude oil inventories had been falling through most of the past year and a half until this Fall, our oil supplies as of December 21st were only 2.2% above the 431,882,000 barrels of oil we had stored on December 22nd of 2017, and remained 9.2% below the 486,063,000 barrels of oil that we had in storage on December 23rd of 2016, and 3.0% below the 455,106,000 barrels of oil we had in storage on December 25th of 2015..     

This Week’s Rig Count

US drilling activity increased for the second week in a row, and was thence up for the 8th time in the past 14 weeks during the week ending December 28th, as drilling for oil continued to expand despite depressed prices and a 6.7 month backlog of uncompleted wellsBaker Hughes reported that the total count of rotary rigs running in the US increased by 3 rigs to 1083 rigs over the week ending December 28th, which was also 154 more rigs than the 929 rigs that were in use as of the December 29th report of 2017, but down from the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC announced their attempt to flood the global oil market…  

the count of rigs drilling for oil increased by 2 rigs to 885 rigs this week, which was also 138 more oil rigs than were running a year ago, while it was still well below the recent high of 1609 rigs that were drilling for oil on October 10, 2014…at the same time, the number of drilling rigs targeting natural gas bearing formations increased by 1 rig to 198 natural gas rigs, which was also 16 more rigs than the 182 natural gas rigs that were drilling a year ago, but way down from the modern high of 1,606 natural gas rigs that were deployed on August 29th, 2008… 

drilling activity in the Gulf of Mexico was unchanged at 24 rigs this week, which was up from the 18 rigs deployed in the Gulf of Mexico a year ago at this time…since there is no other offshore drilling off either coast or off Alaska at this time, nor was there during the same week of 2017, those Gulf of Mexico totals are identical to the US totals..

the count of active horizontal drilling rigs increased by 5 rigs to 945 horizontal rigs this week, which was also 149 more horizontal rigs than the 796 horizontal rigs that were in use in the US on December 29th of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014….on the other hand, the vertical rig count decreased by 1 rig to 68 vertical rigs this week, which was still up from the 65 vertical rigs that were in use during the same week of last year…​at the same time, the directional rig count also decreased by 1 rig to 70 directional rigs this week, which was still up from the 68 directional rigs that were operating on December 29th of 2017…

the details on this week’s changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes…the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas basins…in both tables, the first column shows the active rig count as of December 28th, the second column shows the change in the number of working rigs between last week’s count (December 21st) and this week’s (December 28th) count, the third column shows last week’s December 21st active rig count, the 4th column shows the change between the number of rigs running on Friday and those running on the equivalent weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 2​9th of December, 2017… 

December 28 2018 rig count summary

in something of an oddity, both this week’s state variance table and the shale basin table match the summary figures we have just reviewed; not necessarily because there was no change in activity outside of these major states or basins, but because if there was, it netted out to no change, and thus doesn’t show any in either the Current and Historical Rigs by State xls spreadsheet, nor the count by basin table of the North America Rotary Rig Count excel file that we check each week…the Permian basin, which accounts for more than 40% of US drilling activity, also shows a net no change, even though two rigs were added in Texas Oil District 8, the core Permian – Delaware basin, and ​even ​though ​another rig was added to Texas Oil District 7C, or the southern part of the Permian Midland, because 3 rigs were pulled out of Texas Oil District 8A, or the northern Permian Midland…meanwhile, natural gas rigs were added in Ohio’s Utica shale and Louisiana’s Haynesville, while one natural gas rig was pulled out of Oklahoma’s Ardmore Woodford, which shows no net change because an oil rig was added in that basin at the same time…

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