2nd quarter GDP revision; July’s income and outlays, durable goods, & new home sales

The key economic reports that were released last week were the 2nd estimate of 2nd quarter GDP and the July report on Personal Income and Spending, both from the Bureau of Economic Analysis…the week also saw the release of the July advance report on durable goods and the July report on new home sales both from the Census Bureau, the Case-Shiller house price indexes for June from S&P Case-Shiller, who reported that their national home price index, based on relative April, May and June home sales prices, was 1.5% higher than their home price index based on prices of the same homes that sold during the same three months of a year ago, and the Chicago Fed National Activity Index (CFNAI) for July, a weighted composite index of 85 different economic metrics, which decreased to –0.08 in July from a revised +0.06 in June, which had previously been reported at –0.02…as a result, the more often cited 3 month average of the CFNAI decreased to –0.04 in July from +0.01 in June, which, as a small negative number, would indicate that national economic activity has been slightly below the historical trend over those recent months…

In addition, this week saw the release of two more regional Fed manufacturing surveys for August: 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 slipped to +4 in August from +5 in July, but unchanged from +4 in June, indicating that a slightly smaller plurality of that region’s manufacturers reported improving business metrics in August than did in July, while the Kansas City Fed manufacturing survey for August, which covers western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico; reported their broadest composite index was at +10 in August, up from +9 in July, but down slightly from +11 in June, which means a slightly larger plurality of Tenth District manufacturers reported increased manufacturing activity over the past month…

2nd Quarter GDP Revised and Shows Our Economy Grew at a 1.5% Rate

The Second Estimate of our 2nd Quarter GDP from the Bureau of Economic Analysis indicated that the real output of our goods and services grew at a 1.5% rate during the quarter, revised but virtually unchanged from the 1.5% growth rate reported in the advance estimate last month, as personal consumption expenditures for services grew more than was previously reported, offsetting downward revisions to personal consumption expenditures for goods, to inventories, to government, and an upwards revision to imports, which subtracts from other GDP components….In current dollars, our second quarter GDP grew at a 8.02% annual rate, increasing from what would work out to be a $31,865.7 billion a year rate in the 1st quarter to a $32,486.1 billion annual rate in the 2nd quarter, with the headline 1.5% annualized rate of increase in real output arrived at after annualized GDP inflation adjustments averaging 6.4% were computed from the price changes of the GDP components and applied to their current dollar change; that aggregate  inflation adjustment figure, known as the GDP deflator, was revised from the 5.7% reported with the advance estimate….

As we review this month’s revisions, 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 from one 3 month period to the next, 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 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 National Income and Product Accounts Data Tables……

Growth of real personal consumption expenditures (PCE), the largest component of GDP by far, was revised from the 3.2% growth rate reported last month to a 3.4% growth rate in this 2nd estimate…that net growth rate figure was arrived at by deflating the 8.88% growth rate in the dollar amount of consumer spending with the PCE price index, which indicated consumption weighted consumer inflation grew at a 5.3% annual rate in the 2nd quarter, revised from the 5.1% PCE inflation rate reported a month ago….real consumption of durable goods grew at a 5.7% annual rate, which was revised from the 6.8% growth rate shown in the advance report, and added 0.41 percentage points to GDP, as real consumption of motor vehicles and parts grew at an 10.1% rate and accounted for about 60% of the growth in durables….at the same time, real consumption of nondurable goods by individuals grew at a 3.5% annual rate, revised from the 4.4% increase rate reported in the 1st estimate, and added 0.48 percentage points to the 2nd quarter’s economic growth, as growth in consumption of food, clothing and footwear, and ‘other’ non-durables offset a modest decrease in real consumption of gasoline and other fuels….on the other hand, consumption of services grew at a 3.1% annual rate, revised from the 2.2% growth rate reported last month, and added 1.42 percentage points to the final GDP tally, as a 9.7% growth rate in real consumption of health care accounted for over half of the quarter’s growth in services..…

Meanwhile, seasonally adjusted real gross private domestic investment grew at a 2.7% annual rate in the 2nd quarter, revised down from the 3.0% growth rate estimate reported last month, as real private fixed investment grew at a 7.0% rate, revised but statistically unchanged from the growth rate reported in the advance estimate, while the shrinkage of real inventories was a bit greater than was previously estimated…real investment in non-residential structures now shows a contraction at a 1.8% rate, revised up from the 5.0% contraction rate previously reported, while real investment in equipment grew at 13.6% rate, revised down from the 15.2% growth rate shown a month ago….at the same time, the quarter’s investment in intellectual property products indicated growth at a 8.8% rate, unchanged from the growth rate previously reported, while real residential investment was shown to be growing at a 1.3% annual rate, revised from the 1.5% growth rate shown in the previous report….after those revisions, the contraction in investment in non-residential structures subtracted 0.05 percentage points from the change in 2nd quarter GDP, while the increase in investment in equipment added 0.72 percentage points to the quarter’s growth, the increase in investment in intellectual property added 0.48 percentage points to GDP, and the increase in residential investment added 0.05 percentage points to the 2nd quarter’s growth rate…

Meanwhile, the quarter’s change in real private inventories was revised from the originally reported $89.5 billion decrease in inflation adjusted dollars to indicate inventories shrunk at an inflation adjusted $91.1 billion rate…that came after inventories had shrunk at an inflation adjusted $28.1 billion in the 1st quarter, and hence the $63.0 billion negative change in real inventory growth from that of the 1st quarter subtracted 0.72 percentage points from the 2nd quarter’s growth rate, revised from the 0.67 percentage point subtraction due to a $61.4 billion negative inventory change shown in the advance estimate….however, since growth in inventories indicates that more of the goods produced during the quarter would have been left in storage or “sitting on the shelf” and not sold, the $63.0 billion decrease in their growth conversely means real final sales of GDP were greater by that amount, and therefore the BEA found that real final sales of GDP grew at a 2.2% rate in the 2nd quarter, revised but appearing to be unchanged from the 2.2% rate of increase in real final sales shown in the advance estimate…

The previously reported increase in real exports was virtually unchanged with this estimate, while the previously reported increase in real imports was revised higher at the same time, and as a result the negative impact of our imbalanced foreign trade on GDP was greater than in the advance estimate….our real exports grew at a 4.5% rate, unchanged from the 4.5% growth rate reported in the first estimate, and since exports are added to GDP because they are part of our production that is not included in other GDP components, that export growth added 0.50 percentage points to 2nd quarter GDP, unrevised from the advance report’s addition of 0.50 percentage points….meanwhile, the previously reported 11.5% increase in our real imports was revised to a 12.5% increase, and since imports subtract from GDP because they represent either consumption or investment added to another GDP component that shouldn’t have been because was not produced here, that import increase subtracted 1.64 percentage points from the 2nd quarter’s growth rate, revised from the 1.51 percentage point subtraction due t0 imports shown in the advance report….thus our deteriorating trade balance subtracted a net 1.14 percentage points to 2nd quarter GDP, revised from the rounded 1.01 percentage point subtraction that had been indicated in the advance estimate…

Finally, there were also revisions to real government consumption and investment in this 2nd estimate, as the entire government sector shrunk at an 1.0% rate, revised from the 0.8% contraction rate previously reported…real federal government consumption and investment was seen to have been shrinking at a 4.2% annual rate, revised from the 4.1% contraction rate shown in the 1st estimate, as real federal outlays for defense grew at a 2.4% rate, same as was previously reported, and added 0.09 percentage points to 2nd quarter GDP, while all other federal consumption and investment shrunk at a 13.2% rate, revised from the 12.9% contraction rate previously reported, and subtracted 0.35 percentage points from 2nd quarter GDP….meanwhile, real state and local consumption and investment grew at a 0.9% rate over the quarter, which was revised from the 1.1% growth rate reported in the 1st estimate, and added 0.10 percentage points to 2nd quarter GDP, after a 0.03 percentage points subtraction from that due to lower state and local investment, such as spending for highways, public buildings or infrastructure….note that government outlays for social insurance are not included in this GDP component; rather, they are included within personal consumption expenditures only when such funds are spent on goods or services, thus indicating there was an increase in the output of those goods or services…

July’s Personal Income Rose 0.4%, Personal Spending Rose 0.2%, PCE Price Index Rose 0.2%, Savings Rate at 3.3%

Other than the employment report and the GDP report itself, the monthly report on Personal Income and Outlays from the Bureau of Economic Analysis is probably the most important regular economic release we see each month, since each monthly report on personal consumption expenditures (PCE) accounts for roughly 23% of its quarter’s GDP by itself…in addition, this report also computes 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, our monthly personal income data, as well as disposable personal income, which is income after taxes, and our monthly savings rate…however, because the data in this report feeds in to GDP and other national accounts data, the change reported for each of those metrics is not the current monthly change; rather, they’re seasonally adjusted amounts expressed at an annual rate…however, the percentage changes are computed monthly, from one month’s annualized figure to the next, and in this case of this month’s report they give us the percentage change in each annualized metric from June to July..

Thus, when the opening line of the news release for the July report tell us “Personal income increased $115.1 billion (0.4 percent at a monthly rate) in July“, they mean that the annualized figure for seasonally adjusted personal income in July, $27,114.8 billion, was $115.1 billion, or more than 0.4% greater than the annualized personal income figure of $26,999.7 billion extrapolated for June; the actual, unadjusted change in national personal income from June to July, which is an order of magnitude smaller, is not given…at the same time, annualized disposable personal income, which is income after taxes, rose by almost 0.5%, from an annual rate of $23,732.2 billion in June to an annual rate of $23,858.1 billion in July….the monthly contributors to the increase in personal income, which can be viewed in Table 2.6. of the National Income and Product Accounts for this release, are also annualized figures…in July, the reasons for the $115.1 billion annual rate of increase in personal income included an annualized $39.1 billion increase in wages and salaries, an annualized $30.2 billion increase in government social benefits to individuals, and an annualized $19.9 billion increase in interest and dividend income…

For the personal consumption expenditures (PCE) that will be included in 3rd quarter GDP, BEA reports that they increased at a $36.3 billion annual rate, or by less than 0.2% from June, as the annual rate of PCE rose from $22,214.2 billion in June to $22,250.4 billion in July….June’s PCE was revised from $22,184.1 billion annually to $22,214.2 billion, while PCE figures for the months going back to April were also revised as well, all of which were already included in the revised 2nd estimate of 2nd quarter GDP which we reviewed earlier (data in this report, although often released a business day later than the GDP release, is concurrent with GDP data)….total personal outlays, which includes interest payments and personal transfer payments in addition to PCE, rose by an annualized $36.6 billion to $23,146.2 billion annually in July, which left total personal savings, which is disposable personal income minus total outlays, at a $712.0 billion annual rate in July, up from the revised $622.6 billion in annualized personal savings in June…as a result, the personal saving rate, which is personal savings as a percentage of disposable personal income, rose to 3.0% in July, from 2.6% in June, a savings rate which had been a four year low…

Before personal consumption expenditures are used in the GDP computation, they must first be 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, and which is included in NIPA Table 2.8.4 for this report….that index rose from 131.454 in June to 131.659 in July, a month over month inflation rate that’s statistically 0.155948%, which BEA reports as a PCE price index increase of 0.2 percent for July, following the decrease of 0.1 percent in the PCE price index they reported for June, even as the full decimal fractions are used in all their computations…note that when the PCE price indexes are applied to a given month’s annualized PCE in current dollars, it yields that month’s annualized real PCE in chained 2017 dollars, which are the means that the BEA uses to compare the real goods and services produced in one month or one quarter to the real goods and services produced in another….that result is shown in NIPA Table 2.8.6, where we see that July’s chained dollar consumption total works out to an annual rate of 16,901.3 billion, 0.0076923% more than June’s 16,900.0 billion, a difference in real PCE that the BEA reports as unchanged…

However, to estimate the impact of the change in PCE on the change in GDP, the month over month change doesn’t help us much, since GDP is reported quarterly….thus we have to compare July’s real PCE to the real PCE of the 3 months of the second quarter….while NIPA Table 2.8.6 for this report shows real PCE for all those amounts monthly, the BEA also provides the quarterly annualized chained dollar PCE for those three months in Table 1.5.6 for the 2nd quarter GDP report, where we find that the annualized real PCE for the 2nd quarter was represented by 16,829.7 billion in chained 2017 dollars….when we compare July’s 2017 dollar adjusted PCE of 16,901.3 billion to the 2nd quarter’s adjusted PCE of 16,829.7 billion, we find that July real PCE has grown at a 1.71% annual rate from the 2nd quarter….that means that even if July’s real PCE growth does not improve during August and September, that growth in PCE would still add 1.19 percentage points to the growth rate of 3rd quarter GDP…

July’s Durable Goods: New Orders Rose 1.1%, Shipments Rose 1.0%, Inventories Rose 0.4%

The Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for July (pdf) from the Census Bureau reported that the value of the widely watched new orders for manufactured durable goods rose by $3.6 billion, or by 1.1 percent, to $339.3 billion in July, the fourth increase in five months, following an increase of 0.5% to $335.7 billion in June’s new orders, which was revised from the 0.3% increase to $334.8 billion that was reported for June’s new orders a month ago….after those new order increases, year to date new orders are running 7.6% above those of the first seven months of 2025, up from the 6.7% year-to date increase we saw in this report last month…

As is usually the case, the volatile monthly change in new orders for transportation equipment drove this month’s headline change, as those transportation equipment orders rose $2.6 billion or 2.3 percent to $116.2 billion, led by a 12.7% increase to $19,790 million in new orders for private and commercial aircraft and parts….excluding new orders for transportation equipment, other new orders were up 0.4% in July, while new orders for nondefense capital goods excluding aircraft, a proxy for equipment investment orders, rose 0.2% to $85,946 million…

The seasonally adjusted value of July’s shipments of durable goods, which will be inputs into various components of 3rd quarter GDP after adjusting for changes in prices, increased $3.2 billion or 1.0 percent to $334.7 billion, the tenth increase in the past eleven months, after the value of June shipments was revised from $330.7 billion to $331.5 billion, which is now a 1.0% increase from May….shipments of transportation equipment led the July increase, as they rose $1.4 billion or 1.3 percent to $111.6 billion, led by a 4.1% increase in shipments of defense aircraft, while shipments other than those of transportation equipment were still 0.8% higher…meanwhile, the value of shipments of nondefense capital goods excluding aircraft was up 1.4% to $84,493 million, an increase that will be reflected in 3rd quarter GDP equipment investment figures, after adjusting for any price changes…

Meanwhile, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, rose for the tenth consecutive month, increasing by $2.2 billion or 0.4 percent to $604.4 billion, after the value of end of June durable goods inventories was revised from $602.0 billion to $602.2 billion, now a 0.4% increase from May…an $0.8 billion or 1.5 percent increase to to $51.9 billion in the value of inventories of primary metals led the July inventory increase, while inventories of transportation equipment were up 0.3% to 191,3 billion on a 0.6% increase in the value of inventories of private and commercial aircraft and parts….meanwhile, the value of inventories of durable goods other than transportation equipment was also 0.4% higher at $413.05 billion…

Finally, unfilled orders for manufactured durable goods, which are probably a better measure of industry conditions than the widely watched but obviously volatile new orders, rose for the twenty-fourth time in twenty-five months, increasing by $9.6 billion or 0.6 percent to $1,599.9 billion….that followed an increase of $9.3 billion, or 0.6% to $1,590.3 billion in June, that was barely revised from the $9.3 billion, 0.6% increase to $1,590.1 billion that was previously reported.…a $4.6 billion or 0.5 percent increase to $1,006.4 billion in unfilled orders for transportation equipment underpinned the June increase, while the value of unfilled orders excluding transportation equipment increased 0.8% to $593,523 million….compared to a year earlier, the unfilled order book for durable goods is now 8.8% above the level of last July, as unfilled orders for transportation equipment are 10.4% above their year ago level, led by a 15.3% increase in the backlog of orders for defense aircraft…

New Home Sales Reported Down 10.5% in July on Mostly Lower Prices

The Census report on New Residential Sales for July (pdf) estimated that new single family homes were selling at a seasonally adjusted pace of 607,000 new homes a year, which was 10.5 percent (±14.0 percent)* below the revised June rate of 678,000 new single family home sales a year, and was 6.3 percent (±19.6 percent)* below the estimated annual rate that new homes were selling at in July of last year….the asterisks indicate that based on their small sampling, Census could not be certain whether July’s new home sales rose or fell from those of June, or even from those of July of last year, with the figures in parenthesis representing the 90% confidence range for reported data in this report, which has the largest margin of error and is subject to the largest revisions of any census construction series….hence, these initial new home sales reports are not very reliable and often see significant revisions…with this report; sales new single family homes in June were revised from the annual rate of 628,000 reported last month to a 678,000 a year rate, and home sales in May, initially reported at an annual rate of 580,000 and revised from that figure to 618,000 last month, were revised up to a 630,000 annual rate with this report, while April’s annualized home sales rate, initially reported at a 622,000 rate and revised from a 626,000 rate up to 646,000 rate last month, were revised a bit lower, to a 641,000 rate, with this release..

The annual rates of home sales reported here are seasonally adjusted after extrapolation from the estimates of canvassing Census field reps, which indicated that approximately 50,000 new single family homes sold in July, down from the 59,000 new homes that sold in June, and also down from the 56,000 that sold in May, and also down from the 60,000 new homes that sold in April….the raw figures from Census field agents’ reports were further used to estimate that the median sales price of new houses sold in July was at $393,800, down from the median sale price of $403,100 in June, and down from the median price of $397,300 in July a year ago, while the average July new home sales price was at $508,800, up from $482,800 average sales price in June, and up from the average sales price of $513,200 in July a year ago, but down from the record $564,000 average sales price of July 2022….a seasonally adjusted estimate of 488,000 new single family houses remained for sale at the end of July, which represents a 9.6 month supply at the July sales rate, up from the revised 8.5 month supply of unsold new homes available in June, which had previously been reported as a 9.3 month supply….

(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 chosen from the aforementioned GGO posts, contact me…)

US refinery utilization is highest in 8 years; distillate supplies lowest in 30 years; road fuel supplies are lowest in 18 years

US refinery utilization rate is the highest since September 7th, 2018; Strategic Petroleum Reserve at the lowest level since November 1982; US gasoline inventories at a 41 week low; distillate inventories at the lowest summertime level in more than thirty years; combined road fuel inventories are at their lowest in 18 years; months of supply is lowest for August since World War 2

US oil prices fell for the first time in three weeks as the US policy impetus shifted to economic sanctions on Iran, reducing the level of violence​ around the Persian Gulf…after rising 5.7% to $87.06 a barrel last week as ship traffic ​thru Hormuz slowed and as an end to the conflict in the Middle East looked farther away than ever after new Trump threats against Iran and other countries, the contract price for the benchmark US light sweet crude for October delivery fell by more than $1 a barrel on Asian markets on Monday, as traders took profits following recent gains​, while awaiting details of potentially tougher US sanctions against Iran, and continued lower across global markets amid continued tension in the Middle East as Iran and the United States were embroiled in a fresh trade war. and ​likewise softened Monday morning in New York as traders awaited details about large-scale U.S. sanctions on Iran expected to be revealed later that day, and settled $2.05 lower at $85.01 a barrel after U.S. Treasury Secretary Scott Bessent declined to say what specific countries would be targeted by the new sanctions​, and stopped short of actually imposing penalties…crude oil futures traded higher on Tuesday morning in Asia, as traders analyzed the impact of US secondary sanctions against Iran, and treated the US effort to nudge partners away from Iranian trade as marginal rather than market‑moving, but then extended their sharp decline across global markets as signs of easing tensions between the US and Iran reduced fears of a broader military escalation and potential supply disruptions in the Middle East, and continued to reman soft in early US trading on the back of weaker-than-expected new U.S. sanctions on Iran, which were deemed unlikely to negatively impact oil supply, and settled $2.65 or 3% lower at a one-week low at $82.36 a barrel, as traders shrugged off the latest U.S. sanctions campaign against Iran, viewing economic pressure ‌less risky for oil supplies than a military escalation….oil prices tumbled by more than 2% in the initial hour of trading in Mumbai on Wednesday, following reports that Oman and Iran had discussed establishing a temporary joint maritime corridor in the Strait of Hormuz, but briefly turned higher after Bloomberg News reported that Russia was preparing to escalate attacks on Ukraine after coming to a conclusion that negotiations for a peace deal were stalled, before extending their decline as markets opened in New York, on reports that Iran and Oman ​had made significant progress in negotiations to establish a jointly controlled shipping corridor in the Strait of Hormuz, but ​r​eversed higher after the EIA reported big gasoline and distillate draws, a tiny crude build, and that Cushing inventories were at tank bottoms, before settling 13 cents lower at $82.23 a barrel as traders weighed the news of talks on the Strait of Hormuz between Iran and Oman​,​ and the continuing low volume of oil flowing through the waterway….oil prices extended their decline during Asian trading Thursday, as diplomatic efforts to reopen the Strait of Hormuz raised hopes of a gradual recovery in disrupted energy flows, and continued to decline ​a​cross global markets on expectations of reduced supply risks amid growing prospects for the reopening of the Strait of Hormuz, talks between Iran and Oman, and Qatar’s mediation efforts, but steadied during early US trading as traders weighed easing supply risks in the Middle East against reported Russian plans of an escalation in the war against Ukraine and ​their accumulating refinery outages from Ukrainian attacks, and then settled up $1.30 at $83,53 a barrel after a Wall Street Journal report said President Trump was not interested in returning to terms of a memorandum of understanding reached with Iran in June, and that the US was not in talks with Iran​,despite diplomatic efforts by other countries to re-engage the two sides….oil prices fell slightly during Asian trading on Friday as markets parsed reports that the U.S. was close to gaining access to Venezuela’s oil reserves, even as the focus remained on U.S.-Iran wrangling over the Strait of Hormuz, and remained mixed Friday morning in New York, reflecting a shrinking geopolitical risk premium tied to the U.S-Iran war, and rising oil flows from the Middle East, and settled 13 cents lower at $83.40 a barrel as traders evaluated hints about the U.S. Federal Reserve Bank’s inflation-fighting policy, and rumors of a possible agreement on shipping through the Strait of Hormuz, leaving oil prices 4.2% lower for the week..

meanwhile, natural gas prices finished higher for a third straight week on a smaller than normal injection of gas into storage, and on forecasts for the exceptionally hot weather in the South to continue into early September….after rising 1.5% to $2.773 per mmBTU last week as intense heat over a large part of the country outweighed the copious supplies of natural gas already in storage heading into Autumn, the price of the benchmark natural gas contract for September delivery opened 6.3 cents higher on Monday, as traders looked to sustained cooling demand, but faded throughout the session on heavy storage levels to settle 0.9 cents higher at $2.782 per mmBTU, as sweltering Texas heat and a dip in production provided just enough support to keep prices positive after the overnight rally lost steam…the September contract then opened 7.9 cents lower on Tuesday, as traders braced for the contract expiration later in the week, and digested expectations for milder autumn weather in the weeks ahead, in the face of elevated supply. but traded gradually higher through the morning, as traders balanced fading summer cooling demand against short-term bullish weather forecasts and lower production, and settled 1.2 cents lower at $2.770 per mmBTU amid plentiful supply, sluggish LNG feedgas and a looming seasonal drop-off in consumption…September natural gas opened 6.1 cents higher on Wednesday, as the contract’s final settlement drew near and cooling demand held strong, and settled the session 7.2 cents higher at $2.842 per mmBTU, as record August heat looked set to bleed into September​, and ​as LNG feedgas demand rebounded, giving bulls momentum ahead of Thursday’s government inventory report…the September contract opened 4.2 cents higher on its last day of trading Thursday, as traders braced for a bullish storage report, then pulled back as the report matched their expectations, before rising again to settle 6.5 cents higher at $2.907 per mmBTU, on the lean storage injection and on rising feedgas demand from the Freeport LNG terminal, while the more actively traded benchmark natural gas contract for October delivery settled 4.0 cents higher at $2.914 per mmBTU…with commodity markets now citing the price of the benchmark natural gas contract for October delivery, that contract price ​s​eesawed early Friday, amid abiding summer heat, strengthening LNG volumes, a dwindling but still notable storage surplus and seasonally strong production, and remained lower at midday as traders weighed the approaching shoulder season decline in demand against strong LNG feedgas and hotter regional changes to the weather outlook, and settled 2.6 cents lower at $2.888 per mmBTU​, as cooler early September weather trends undercut demand expectations a​fter Thursday’s rally stalled short of $3, outweighing persistent late-summer heat and the leanest storage builds of the summer….but natural gas prices still finished 4.8% higher for the week, while the price of the benchmark October contract, which had finished the prior week at $2.811 per mmBTU, finished 3.4% higher..

The EIA’s natural gas storage report for the week ending August 21st indicated that the amount of working natural gas held in underground storage rose by 15 billion cubic feet to 3,184 billion cubic feet by the end of the week, which left our natural gas supplies 30 billion cubic feet, or 0.9% below the 3,214 billion cubic feet of gas that were in storage on August 21st of last year, but 167 billion cubic feet, or 5.5% above the five-year average of 3,017 billion cubic feet of natural gas that had typically been in working storage as of the 21st of August over the most recent five years….the 15 billion cubic foot injection into natural gas storage for the cited week equaled the 15 billion cubic foot injection into storage that the market had been expecting ahead of the report, but it was less than the 17​ billion cubic foot of gas that were injected into natural gas storage during the corresponding week of 2025, and also less than the average 33 billion cubic foot injection into natural gas storage that had been typical for the third week in August over the past five 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 August 21st showed that after a decrease in our oil imports and an increase in demand for oil the EIA could not account for, we had we had to pull oil out of our stored crude supplies for the seventeenth time in eighteen weeks, and for the 39th time in sixty-five weeks, as a​n​other big withdrawal of oil from the SPR ​l​ed to a small addition to commercial crude supplies…. Our imports of crude oil fell by an average of 435,000 barrels per day to 6,158,000 barrels per day, after falling by an average of 746,000 barrels per day during the prior week, while our exports of crude oil fell by an average of ​2​74,000 barrels per day to average 3,792,000 barrels per day, which, when used to offset our imports, meant that the net of our trade of oil worked out to an import average of 2,366,000 barrels of oil per day during the week ending August 21st, an average of 161,000 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 supplies from Alaskan gas liquids, from natural gasoline, from condensate, and from unfinished oils was 2,000 barrels per day lower than the prior week at 883,000 barrels per day, while during the same week, production of crude from US wells was 13,000 barrels per day higher at 13,843,000 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 total of 17,092,000 barrels per day during the August 21st reporting week…

Meanwhile, US oil refineries reported they were processing an average of 17,393,000 barrels of crude per day during the week ending August 21st, an average of 1,000 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 net of 515,000 barrels of oil per day were being pulled from the supplies of oil stored in the US… So, based on all that reported & estimated data, the crude oil figures provided by the EIA appear to indicate that our total working supply of oil from storage, from net imports, from transfers, and from oilfield production during the week ending August 21st averaged a rounded 214,000 more barrels per day than what our oil refineries reported they used during the week.  To account for the difference between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a [ -214,000 ] 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 indicating there must have been a error or omission of that amount in the week’s oil supply & demand figures that we have just transcribed…. Since 29,000 barrels per day of oil supply could not be accounted for in the prior week’s EIA data, that means there was a 243,000 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 somehow off by that much. and therefore not very useful… However, since most oil traders react to to the figures in these weekly EIA reports as if they were gospel, 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 supply, see this EIA explainer….also see this March 2023 twitter thread from an EIA administrator addressing these ongoing weekly errors, and what they had once hoped to do about it).

This week’s rounded 515,000 barrel per day average decrease in our overall crude oil inventories came as an average of 14,000 barrels per day were being added to our commercial stocks of crude oil, while 529,000 barrels per day were being pulled out of our Strategic Petroleum Reserve, the twenty-second consecutive Iran war related withdrawal from the SPR, including the four largest draws in SPR history, which left the SPR level at 289,726,000 barrels, the lowest since it was initially being filled in November 1982….Further details from the weekly Petroleum Status Report (pdf) indicated that the 4 week average of our oil imports rose to 6,572,000 barrels per day last week, which was 2.6% more than the 6,403,000 barrel per day average that we were importing over the same four-week period last year, while the four week average of our exports fell to 3,650,000 barrels per day last week, which was 2.6% less than the 3,769,000 barrel per day average that we were exporting last year year at this time… This week’s crude oil production was reported to be 13,000 barrels per day higher at 13,843,000 barrels per day as the EIA’s estimate of the output from wells in the lower 48 states was 6,000 barrels per day higher at 13,413,000 barrels per day, while Alaska’s oil production was 7,000 barrels per day higher at 430,000 barrels per day…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 was 5.7% higher than that of our pre-pandemic production peak, and was also 42.7% 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 97.4% of their capacity while processing those 17,393,000 barrels of crude per day during the week ending August 21st, up from 97.2% the prior week, and the highest refinery utilization rate since September 7th, 2018….the 17,393,000 barrels of oil per day that were refined that week were 3.0% more than the 16,880,000 barrels of crude that were being processed daily during the week ending August 22nd of 2025, but were less than 0.1% less than the 17,408,000 barrels that were being refined during the pre-pandemic week ending August 23rd, 2019, when our refinery utilization rate was at 95.2%, which was close to the pre-pandemic normal utilization rate for this time of year…

While there was little change in the amount of oil that was being refined this week, gasoline output from our refineries was higher, increasing by 61,000 barrels per day to 9,772,000 barrels per day during the week ending August 21st, after our refineries’ gasoline output had increased by 143,000 barrels per day during the prior week… This week’s gasoline production was 2.3% higher than the 9,554,000 barrels of gasoline that were being produced daily over the week ending August 22nd of last year, but 8.3% less than the gasoline production of 10,660,000 barrels per day seen during the prepandemic week ending August 23rd, 2019….on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 91,000 barrels per day to 5,135,000 barrels per day, after our distillates output had decreased by 54,000 barrels per day during the prior week.  With those decreases, our distillates output was 1.6% less than the 5,217,000 barrels of distillates that were being produced daily during the week ending August 22nd of 2025, and 1.1% less than the 5,193,000 barrels of distillates that were being produced daily during the pre-pandemic week ending August 23rd, 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 22nd time in twenty-eight weeks, decreasing by 2,536,000 barrels to a 41 week low of 206,842,000 barrels during the week ending August 21st, after our gasoline inventories had increased by 688,000 barrels during the prior week.  Our gasoline supplies fell this week because the amount of gasoline supplied to US users rose by 354,000 barrels per day to  9,043,000 barrels per day, and even though our imports of gasoline rose by 199,000 barrels per day to 565,000 barrels per day, while our exports of gasoline rose by 38,000 barrels per day to 890,000 barrels per day… After fifty-three gasoline inventory withdrawals over the past seventy-nine weeks, our gasoline supplies were 7.0% lower than last August 22nd’s gasoline inventories of 222,334,000 barrels, and about 6% below the five year average of our gasoline supplies for this time of year…

After this week’s decrease in distillates production, our supplies of distillates fell for the thirteenth time in twenty-eight weeks, deceasing by 2,228,000 barrels to 103,391,000 barrels during the week ending August 21st, the lowest summertime level in more than thirty years, after our distillates supplies had decreased by 1,530,000 barrels during the prior week… Our distillates supplies fell by more this week because the amount of distillates supplied to US markets, an indicator of domestic demand, fell by 114,000 barrels per day to 3,953,000 barrels per day, and because our exports of distillates rose by 189,000 barrels per day to 1,790,000 barrels per day, while our imports of distillates rose by 67,000 barrels per day to 176,000 barrels per day… After 28 withdrawals from distillates inventories over the past 59 weeks, our distillates supplies at the end of the week were 9.5% lower than the 114,242,000 barrels of distillates that we had in storage on August 22nd of 2025, and were about 14% below the five year average of our distillates inventories for this time of the year…​with gasoline inventories similarly depressed compared to historical level, the drop in distillate fuels left our combined road fuel inventories at their lowest in 18 years..

Finally, even after the decrease in our oil imports, another big withdrawal from the SPR meant that our commercial supplies of crude oil in storage rose for the 14th time in twenty-six weeks, and for the 28th time over the past year, increasing by 95,000 barrels over the week, from 428,815,000 barrels on August 14th to 428,910,000 barrels on August 21st, after our commercial crude supplies had increased by 4,405,000 barels over the prior week….After this week’s increase, our commercial crude oil inventories were about 1% above the recent five-year average of commercial oil supplies for this time of year, while they were about 29% above the average of our available crude oil stocks as of the third weekend of August over the 5 years at the beginning of the past decade, with the 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 in the Spring of 2020, then jumped again after February 2021’s winter storm Uri froze off US Gulf Coast refining, but then fell sharply due to increased exports to Europe following the onset of the Ukraine war, only to jump again following the Christmas 2022 refinery freeze-offs, changes in our commercial crude supplies had been less extreme up until the onset of the Iran war, when they were initially built up to a three year high by mid-April…However, after falling sharply over three months to the lowest in nearly eight years four weeks ago, our commercial crude oil inventories have since rebounded, and as of August 21st were 2.5% above the 418,292,000 barrels of oil we had in commercial storage on August 22nd of 2025, and were 0.9% more than the 425,183,000 barrels of oil that we had in storage on August 23rd of 2024, but were 1.1% less than the 433,528,000 barrels of oil we had left in commercial storage on August 18th of 2023…

This Week’s Rig Count

The US rig count ​n​etted out as unchanged over the week ending August 2​8​th, as the number of rigs targeting oil was down by ​f​ive, the count of rigs targeting natural gas was ​u​p by five, and miscellaneous rigs were ​u​nchanged…for a quick snapshot of this week’s rig count, we are again including below a screenshot of the rig count summary table from Baker Hughes…in the table below, the first column shows the active rig count as of August 2​8​th, the second column shows the change in the number of working rigs between last week’s count (August 21st) and this week’s (August 2​8​th) count, the third column shows last week’s August 21st​ active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday of the same week 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 Friday, the 2​​9​th​ of August, 2025…

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July’s industrial production and new home construction

The most widely watched economic reports that were released last week were the July report on Industrial Production and Capacity Utilization from the Fed and the July report on New Residential Construction from the Census Bureau….in addition, on Friday the Bureau of Labor Statistics released the Regional and State Employment and Unemployment Report for July, a report which breaks down the two employment surveys from the monthly national jobs report by state and region….while the text of this report provides a useful summary of this data, the serious statistics 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 sector for each of the 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands…

The week also saw the release of the first two Fed regional manufacturing reports for August: the Empire State Manufacturing Survey from the New York Fed, which covers New York state, southwestern Connecticut, and northern New Jersey, reported their headline general business conditions index rose from +5.7 in June and from+15.6 in July to +20.6 in August, its highest reading in more than four years, and indicating that a majority of Second District manufacturers were reporting improving business conditions in August, about 15% more than the small plurality that reported improving business conditions just two months earlier, while the Philadelphia Fed Manufacturing Survey for August, covering most of Pennsylvania, southern New Jersey, and Delaware, reported their broadest diffusion index of manufacturing conditions rose to a five-year high of +47.4 in August from +41.4 in July, as “56.9% of the respondents reported an increase in general business activity, and 9.6% reported a decrease from July to August, while 29 percent reported no change”…

Industrial Production Rose 0.2% in July after June Production Revised 0.2% Higher

The Fed’s G17 release on Industrial production and Capacity Utilization for July indicated that industrial production rose 0.2%, after rising by a revised 0.3% in June, but after being revised to unchanged in May, and is now up 1.1% from a year ago….the industrial production index, with the benchmark now set for average 2017 production to equal to 100.0, rose to 103.0 in July from 102.8 in June, which was revised from the 102.6 reported for June a month ago…at the same time, the May reading for the IP index was revised from 102.6 to 102.5, the April reading for the index was revised from 102.4 to 102.5, and the March reading for the index was revised from 101.6 to 101.8…

The manufacturing index, which accounts for around 77% of the total IP index, rose 0.2% to 98.4 in July, after the June manufacturing index was revised from 97.9 to 98.3, and after the May manufacturing index was revised but unchanged at 98.0, the April manufacturing index was revised from the 97.8 published last month to 98.0, and the March index was revised from 97.1 to 97.3, all of which left the manufacturing index up 1.2% from a year ago….meanwhile, the mining index, which includes oil and gas well drilling, rose by 0.2% to 122.4 in July, after the June index was revised up from 124.2 to 122.2, which left mining 1.0% higher than it was a year ago, …finally, the seasonally adjusted utility index, which often fluctuates due to above or below normal temperatures, rose 0.5% to 110.7 in our hot July, after the June utility index was revised from 109.6 to 110.2, leaving the utility index 0.7% above its year ago reading of 109.9, when July’s temperature averages were also above normal…(NB: i don’t see an explanation for the sharp revisions to the June mining and utility indices, which virtually reversed the large revisions we saw a month ago…it’s possible there was a problem with last month’s data)

This report also provides capacity utilization figures, which are 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 rose from 76.2% in June to 76.3% in July, after capacity utilization for June was revised up from the 76.1% reported a month ago…capacity utilization for NAICS durable goods production facilities rose from 75.8% in June to 76.2% in July, while capacity utilization for non-durables producers fell from 76.0% to 75.6% at the same time….meanwhile, capacity utilization for the mining sector was at 86.1% in July, after June’s utilization was revised down from 87.4% to 86.0%….meanwhile. utilities were operating at 70.0% of capacity during July, up from their 69.8% of capacity during June, a figure that was originally reported at 69.5%….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…

Housing Starts Reported 13.5% Lower in July; Building Permits Up 5.0%

The July 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 1,239,000 in July, which was “12.4 percent (±9.5 percent) below” the revised June housing start rate of 1,374,000, and was and was “13.5 percent (±11.0 percent) below” last July’s annual pace of 1,432,000 housing starts…..the figures in parenthesis indicate the most likely range of the change indicated; in other words, July’s housing starts could have been down by 2.9% or down by as much as 21.9% from those of June, with even larger revisions eventually possible…with this report, the annual rate for June housing starts was revised from the 1,427,000 reported last month to 1,415,000, while May starts, which were first reported at a 1,177,000 unit annual rate, were revised from last month’s initial revised figure of 1,199,000 annually to an annual rate of 1,182,000 with this report….

Those annual rates of housing starts reported here were extrapolated from a survey of a small percentage of US building permit offices visited by Census field agents, from which they estimated that 111,200 housing units were started in July, down from the 133,500 units started in June, but up from the 107,800 housing starts estimated in May….of those housing units started in July, an estimated 72,800 were single family homes and 37,600 were units in structures with more than 5 units, down from the revised 86,300 single family starts in June, and down from the 45,500 units started in structures with more than 5 units in June…

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 sharply revised housing starts data….in July, Census estimated new building permits were being issued for a seasonally adjusted annual rate of 1,443,000 housing units, which was 5.0 percent above the revised June annual rate of 1,374,000 permits, and was 3.1 percent above the rate of building permit issuance in July a year earlier…the annual rate for housing permits issued in June was revised from 1,367,000 to 1,374,000….

Again, these annualized estimates for new permits reported here were extrapolated from the unadjusted estimates collected by canvassing census agents, which showed permits for 129,900 housing units were issued in July, down from the revised estimate of 130,500 new permits issued in June…the July permits included 80,500 permits for single family homes, down from 83,800 single family permits in June, and 44,100 permits for housing units in apartment buildings with 5 or more units, up from 41,900 such multifamily permits a month earlier…

(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 chosen from the aforementioned GGO posts, contact me…)

SPR at 1982 level; US refinery utilization matches its highest since Sept 2018; seasonal distillates inventories at 30 year low

US Strategic Petroleum Reserve is now at the lowest level since it was initially being filled in December 1982; the US refinery utilization rate matches its highest since September 2018; US distillates inventories fell further from their lowest summertime level in thirty years..

US oil prices rose for a second straight week and for the sixth time in eight weeks as ​Hormuz ship traffic slowed and an end to the conflict in the Middle East looked farther away than ever after a week of new Trump threats against Iran and other countries….after rising 5.1% to $82.40 a barrel last week on increasingly belligerent exchanges between Trump and Iran and on attacks on oil tankers in the Red Sea and in & around the Strait of Hormuz, the contract price for the benchmark US light sweet crude for September delivery rose across Asian markets on Monday​, as expectations for a breakthrough in U.S.-Iran peace talks faded and tanker traffic through the Strait of Hormuz slowed, heightening concerns over geopolitical risks in the market, then edged higher during a choppy morning session in New York amid heightened uncertainty over the future of the U.S.-Iran war, while fresh bearish economic data from China capped ​its gains, ​a​nd then rallied amid concerns over President Trump’s comments demanding that Iran surrender while threatening to also attack Oman, and settled $2.10 higher at $84.50 a barrel as Iran said a deal to end the war with the US is ‘no longer relevant’ following repeated US violations of the original ceasefire agreement…oil prices continued to rise during Asian trading on Tuesday as diminishing prospects for a U.S.-Iran deal fueled concerns over prolonged supply disruptions through the Strait of Hormuz, and edged higher during morning trade in Europe as prospects for a deal to end the war in the Middle East deteriorated after Iran said it would take a more offensive stance, and as the United States ruled out extending the ceasefire agreement, heightening concerns about prolonged disruptions to energy supplies, and held at their highest in nearly three weeks in early New York trading on dimming peace prospects and mounting supply disruptions, while fresh attacks on tankers and refineries catapulted U.S. diesel margins to record highs, and closed up 44 cents, or 0.5%, at a three week high of $84.94 a barrel as progress on peace talks and the resumption of oil tanker traffic through the strategic Strait of Hormuz appeared to have halted, threatening to extend the conflict that the U.S. and Israel launched with their attacks on Iran on February 28th …oil prices rose for a fourth consecutive session across global markets on Wednesday, as the U.S.-Iran standoff in the Strait of Hormuz showed few signs of ending soon, which in turn spurred bets that global supplies could remain tight over the coming months, and continued to climb in early Wednesday morning trading in New York as oil flows through the Strait of Hormuz continued to slow amid new attacks on tankers and rising tensions between Iran and the United Arab Emirates, then turned choppy as traders weighed the ‘dark fleet’ transits after the EIA reported a large distillates ​inventory draw and that Cushing OK oil stocks remained near ‘tank bottoms’, before settling 89 cents higher at $85.83 a barrel​, as traders worried about escalating ‌tensions in the Middle East after the United Arab Emirates decided to suspend all financial and economic transactions with Iran, and as ship traffic through the Strait of Hormuz remained slow….the September oil contract was broadly steady in early Asian trading on Thursday, as traders assessed the outlook for the war between the United States and Iran and the security of navigation through the Strait of Hormuz, then rebounded from early losses to gain more than 1 per cent as fresh US sanctions aimed at isolating Iran stoked concerns over ​further disruptions to global oil supplies, and then rose further during the US session after U.S. Treasury Secretary Scott Bessent said the US would impose “the toughest sanctions in history” on Iran, while urging Beijing to cooperate with Washington, and expired $2.00 higher at $87.83 a barrel after President Trump warned of retaliation against nations supporting Iran, his latest attempt to resolve a war that has stranded millions of barrels of Middle Eastern oil, while the contract price for the benchmark US crude for October delivery settled $2.44 higher at $86.83 a barrel…with global markets now citing that October contract for the benchmark US crude as the US price of oil, oil futures traded lower on Friday morning in Asia despite the US threat to impose the ‘toughest sanctions in history’ on Iran, but edged higher in early morning trade in New York on the back of rising tensions between the U.S. and Iran and slowing oil flows from the Middle East, and settled 23 cents higher at $87.06 a barrel after Iranian President Masoud Pezeshkian said “it is better to end the war today” when Iran is “in a position of power and dignity,”….oil prices thus finished 5.7% higher for the week, while October contract for the benchmark US crude, which had ended the prior week at $81.47, ended up 6.9% higher…

meanwhile, natural gas prices finished higher for a second time in eight weeks, as intense heat over a large part of the country outweighed the copious supplies of natural gas already in storage heading into Autumn….after rising 2.7% to $2.733 per mmBTU last week as weather models showed exceptional heat building across the southern US, the price of the benchmark natural gas contract for September delivery opened 6.1 cents lower on Monday, a markdown that analysts attributed to hefty storage levels and the waning cooling-demand season, then traded in a narrow band near $2.695 into the afternoon before settling 4.3 cents lower at $2.690 per mmBTU, as traders weighed strong near-term cooling demand against looming fall weather and hefty supply readings….that September natural gas contract opened 1.2 cents higher on Tuesday and gradually trudged higher throughout the session, as the market weighed steady production against hearty near-term cooling demand, and settled 8.6 cents higher at $2.776 per mmBTU as traders focused on strong mid-August cooling demand and expectations for a seasonally lean storage injection…that natural gas contract price then started Wednesday 6.8 cents higher and climbed to an intraday high of $2.875 at 9:45 AM, as news of increased cooling demand was added to the already bullish short-term forecast, but stepped lower from that high to stabilize near $2.830 into the afternoon before settling 3.8 cents higher at $2.814 per mmBTU, as natural gas traders turned their attention toward a coming shoulder season that could leave balances even looser​, once cooling demand faded, with production hovering near record levels and LNG demand still below what analysts said might be needed to absorb growing supply…however, natural gas opened 8.4 cents lower on Thursday and then withdrew ​further following the 10:30AM storage report, even as the report met market expectations, and settled 8.1 cents lower at $2.733 per mmBTU as the EIA inventory report proved bullish relative to historical norms but left stockpiles at hefty levels as the Autumn shoulder season neared…natural gas futures rebounded Friday morning as European weather models reversed sharply hotter, restoring stronger cooling demand expectations through early September, then edged higher through midday as sharply hotter weather models ratcheted up CDD forecasts, and settled 4.0 cents higher at $2.773 per mmBTU as intense heat across a majority of the country outweighed the impact of heavy supplies that had bogged down the market the previous session, leaving natural gas prices 4​.0 cents or 1.5% higher for the week…

The EIA’s natural gas storage report for the week ending August 14th indicated that the amount of working natural gas held in underground storage rose by 16 billion cubic feet to 3,169 billion cubic feet by the end of the week, which left our natural gas supplies 28 billion cubic feet, or 0.9% below the 3,197 billion cubic feet of gas that were in storage on August 14th of last year, but 185 billion cubic feet, or 6.2% above the five-year average of 2,984 billion cubic feet of natural gas that had typically been in working storage as of the 14th of August over the most recent five years….the 16 billion cubic foot injection into natural gas storage for the cited week was close to the 14 billion cubic foot injection into storage that the market had been expecting ahead of the report, but it was less than the 19 billion cubic foot of gas that were injected into natural gas storage during the corresponding week of 2025, and also less than the average 29 billion cubic foot injection into natural gas storage that had been typical for the second week in August over the past five 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 August 14th showed that after a big decrease in our oil imports and a jump in our oil exports, we had we had to pull oil out of our stored crude supplies for the sixteenth time in seventeen weeks, and for the 38th time in sixty-four weeks, as the ​withdraw​al of oil from the SPR was greater than the addition to commercial crude supplies…. Our imports of crude oil fell by an average of 746,000 barrels per day to 6,593,000 barrels per day, after rising by an average of 1,140,000 barrels per day to a twenty month high during the prior week, while our exports of crude oil rose by an average of 1,008,000 barrels per day to average 4,066,000 barrels per day, which, when used to offset our imports, meant that the net of our trade of oil worked out to an import average of 2,527,000 barrels of oil per day during the week ending August 14th, an average of 1,754,000 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 supplies from Alaskan gas liquids, from natural gasoline, from condensate, and from unfinished oils was 662,000 barrels per day higher than the prior week at 886,000 barrels per day, while during the same week, production of crude from US wells was 25,000 barrels per day higher at 13,830,000 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 total of 17,243,000 barrels per day during the August 14th reporting week…

Meanwhile, US oil refineries reported they were processing an average of 17,395,000 barrels of crude per day during the week ending August 14th, an average of 215,000 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 net of 123,000 barrels of oil per day were being pulled from the supplies of oil stored in the US… So, based on all that reported & estimated data, the crude oil figures provided by the EIA appear to indicate that our total working supply of oil from storage, from net imports, from transfers, and from oilfield production during the week ending August 14th averaged a rounded 29,000 fewer barrels per day than what our oil refineries reported they used during the week.  To account for the difference between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a [ +29,000 ] 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 indicating there must have been a error or omission of that amount in the week’s oil supply & demand figures that we have just transcribed…. ​​But since 486,000 barrels per day of oil supply could not be accounted for in the prior week’s EIA data, that means there was a 457,000 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 somehow off by that much. and therefore pretty useless… However, since most oil traders react to to the figures in these weekly EIA reports as if they were gospel, 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 supply, see this EIA explainer….also see this March 2023 twitter thread from an EIA administrator addressing these ongoing weekly errors, and what they had once hoped to do about it).

This week’s rounded 123,000 barrel per day average decrease in our overall crude oil inventories came as an average of 629,000 barrels per day were being added to our commercial stocks of crude oil, while 753,000 barrels per day were being pulled out of our Strategic Petroleum Reserve, the twenty-first consecutive Iran war related withdrawal from the SPR, including the four largest draws in SPR history, which left the SPR level at 293,426,000 barrels, the lowest since it was initially being filled in December 1982….Further details from the weekly Petroleum Status Report (pdf) indicated that the 4 week average of our oil imports rose to 6,453,000 barrels per day last week, which was 1.2% more than the 6,379,000 barrel per day average that we were importing over the same four-week period last year, while the four week average of our exports rose to 3,569,000 barrels per day last week, which was 2.2% more than the 3,491,000 barrel per day average that we were exporting last year year at this time… This week’s crude oil production was reported to be 25,000 barrels per day higher at 13,830,000 barrels per day as the EIA’s estimate of the output from wells in the lower 48 states was 6,000 barrels per day higher at 13,407,000 barrels per day, while Alaska’s oil production was 19,000 barrels per day higher at 423,000 barrels per day…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 was 5.6% higher than that of our pre-pandemic production peak, and was also 42.6% 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 97.2% of their capacity while processing those 17,395,000 barrels of crude per day during the week ending August 14th, up from 96.2% the prior week, and matching the highest refinery utilization rate since September 2018, which was also hit three weeks earlier….the 17,395,000 barrels of oil per day that were refined that week were 1.1% more than the 17,208 ,000 barrels of crude that were being processed daily during the week ending August 15th of 2025, but were 1.7% less than the 17,702,000 barrels that were being refined during the pre-pandemic week ending August 16th, 2019, when our refinery utilization rate was at 95.9%, which was close to the pre-pandemic normal utilization rate for this time of year…

With the increase in the amount of oil that was being refined this week, gasoline output from our refineries was also higher, increasing by 143,000 barrels per day to 9,711,000 barrels per day during the week ending August 14th, after our refineries’ gasoline output had decreased by 1,000 barrels per day during the prior week… This week’s gasoline production was 1.6% higher than the 9,813,000 barrels of gasoline that were being produced daily over the week ending August 15th of last year, but 1.9% less than the gasoline production of 9,897,000 barrels per day seen during the prepandemic week ending August 16th, 2019….on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 54,000 barrels per day to 5,226,000 barrels per day, after our distillates output had increased by 50,000 barrels per day during the prior week.  With that decrease, our distillates output was 2.0% less than the 5,330,000 barrels of distillates that were being produced daily during the week ending August 15th of 2025, and 2.2% less than the 5,340,000 barrels of distillates that were being produced daily during the pre-pandemic week ending August 16th, 2019….

With this week’s increase in our gasoline production, our supplies of gasoline in storage at the end of the week rose for the sixth time in twenty-seven weeks, increasing by 688,000 barrels to 209,378,000 barrels during the week ending August 14th, after our gasoline inventories had decreased by 968,000 barrels during the prior week.  Our gasoline supplies rose this week because the amount of gasoline supplied to US users fell by 275,000 barrels per day to 8,964,000 barrels per day, and even though our imports of gasoline fell by 217,000 barrels per day to 366,000 barrels per day, while our exports of gasoline were unchanged at 852,000 barrels per day… After fifty-two gasoline inventory withdrawals over the past seventy-eight weeks, our gasoline supplies were 6.3% lower than last August 15th’s gasoline inventories of 223,570,000 barrels, and still about 5% below the five year average of our gasoline supplies for this time of year…

After this week’s decrease in distillates production, our supplies of distillates fell for the twelfth time in twenty-seven weeks, deceasing by 1,530,000 barrels to 105,619,000 barrels during the week ending August 14th, the lowest summertime level in thirty years, after our distillates supplies had decreased by 10,000 barrels during the prior week… Our distillates supplies fell by more this week because the amount of distillates supplied to US markets, an indicator of domestic demand, rose by 495,000 barrels per day to 3,953,000 barrels per day, and even while our exports of distillates fell by 334,000 barrels per day to 1,601,000 barrels per day, while our imports of distillates fell by 2,000 barrels per day to 109,000 barrels per day… After 27 withdrawals from distillates inventories over the past 58 weeks, our distillates supplies at the end of the week were 9.0% lower than the 116,028,000 barrels of distillates that we had in storage on August 15th of 2025, and were about 13% below the five year average of our distillates inventories for this time of the year…

Finally, after the increase in our oil exports and the decrease in our oil imports, the big withdrawal from the SPR meant that our commercial supplies of crude oil in storage rose for the 14th time in twenty-six weeks, and for the 27th time over the past year, increasing by 4,405,000 barrels over the week, from 424,410,000 barrels on August 7th to 428,815,000 barrels on August 14th, after our commercial crude supplies had increased by 17,423,000 barrels over the prior week….After this week’s increase, our commercial crude oil inventories were near the recent five-year average of commercial oil supplies for this time of year, while they were about 28% above the average of our available crude oil stocks as of the second weekend of August over the 5 years at the beginning of the past decade, with the 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 in the Spring of 2020, then jumped again after February 2021’s winter storm Uri froze off US Gulf Coast refining, but then fell sharply due to increased exports to Europe following the onset of the Ukraine war, only to jump again following the Christmas 2022 refinery freeze-offs, changes in our commercial crude supplies had been less extreme up until the onset of the Iran war, when they were initially built up to a three year high by mid-April…However, after falling sharply over the past three months until last week, our commercial crude oil inventories as of August 14th were 1.9% above the 420,684,000 barrels of oil we had in commercial storage on August 15th of 2025, and were 0.7% more than the 430,678,000 barrels of oil that we had in storage on August 16th of 2024, but 2.5% less than the 439,662,000 barrels of oil we had left in commercial storage on August 11th of 2023…

This Week’s Rig Count

The US rig count decreased by five over the week ending August 21st, as the number of rigs targeting oil was down by three, the count of rigs targeting natural gas was down by one, and miscellaneous rigs were down by one…for a quick snapshot of this week’s rig count, we are again including below a screenshot of the rig count summary table from Baker Hughes…in the table below, the first column shows the active rig count as of August 21st, the second column shows the change in the number of working rigs between last week’s count (August 14th) and this week’s (August 21st) count, the third column shows last week’s August 14th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday of the same week 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 Friday, the 22nd of August, 2025…

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July’s consumer and producer prices, retail sales, and existing home sales; June’s business inventories

The major economic reports released last week were the July Consumer Price Index and the July Producer Price Index, and the June Import-Export Price Index, all from the Bureau of Labor Statistics, the Retail Sales Report for July and the concurrently released Business Sales and Inventories report for June, both from the Census bureau, and the Existing Home Sales Report for July from the National Association of Realtors (NAR)…in addition, this week also saw the Consumer Credit Report for June from the Fed, which reports on non-real estate consumer borrowing, and which indicated consumer credit outstanding grew by a seasonally adjusted $14.2 billion in June, or at a 3.3% annual rate, as non-revolving credit grew at a 2.3% rate to $3,815.8 billion, while revolving credit outstanding grew at a 6.0% rate to $1,351.1 billion…for the second quarter, consumer credit grew at a 2.6% annual rate, with revolving credit up at an 3.9% annual and non-revolving credit up at a 2.1% annual rate….

CPI Rose 0.1% in June on Higher Prices for Housing, Medical Care, and Vehicles

The consumer price index was 0.1% higher in June, as higher prices for rent, utilities, used cars and trucks, vehicle maintenance and repairs, eating out, medical care, college tuition, air fares, public transportation, clothing, appliances, computers, smartphones, telephone services, video equipment including TVs, video rentals, and trash collection were partly offset by lower prices for fuel, groceries, lodging away from home, car and truck rentals, motor vehicle fees, auto, home, and health insurance, bank services, tax preparation, drugs and medical supplies, and admissions to sporting events….the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the weighted average of seasonally adjusted prices for consumer goods and services was 0.1% higher in July, after being 0.4% lower in June, 0.5% higher in May, 0.6% higher in April, 0.9% higher in March, 0.3% higher in February, 0.2% higher in January, 0.3% higher in December, after being 0.2% higher the two months ending in November 0d 2025, 0.3% higher in September, 0.3% higher in August, and 0.2% higher in July of last year…. The unadjusted CPI-U index, which was originally set to have prices of the 1982 to 1984 period equal to 100, actually fell from 333.952 in June to 333.918 in July, which left it 3.364825% higher than the index reading of 323.048 from July of last year, which is reported as a 3.4% year over year increase, down from the 3.5% year over year increase that was reported for June, with that widely cited year over year change simply reflecting the effect of last July’s +0.2% increase dropping out of the comparison and being replaced by the current month’s +0.1%, and not telling us anything more about inflation beyond that….with just slightly higher prices for food and much lower prices for energy this month, seasonally adjusted core prices, which exclude both food and energy, were 0.2% higher over the month, as the unadjusted core price index rose from 336.882 in June to 337.133 in July, which left the core index 2.478266% ahead of its year ago reading of 328.980, which is reported as a 2.5% year over year increase, down from the 2.6% year over year core price increase that was reported for June, 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 was 1.5% lower in July, after being 5.7% lower in June, 3.9% higher in May, 3.8% higher in April, 10.9% higher in March, 0.6% higher in February, 1.5% lower in January, 0.3% higher in December, 1.1% higher in November, 1.5% higher in September, 0.7% higher last August, and 1.1% lower last July,  and is still 14.7% higher than in July of a year ago….the price index for energy commodities was 2.9% lower in July, on a 2.9% decrease in the price index for gasoline and a 1.7% decrease in the price index for fuel oil, while the price index for “other energy commodities”, including propane, kerosene, and firewood, averaged out to be 0.1% higher….meanwhile, the price index for energy services was 0.3% higher, after falling 0.7% in June, as the price index for utility gas service was 0.7% higher in July, and is still 4.3% higher than it was a year ago, while the electricity price index was 0.1% higher, after falling 1.0% in June…. energy commodities are still averaging 24.7% above their year ago levels, with gasoline prices averaging 24.6% higher than they were a year ago, while the energy services price index is up 4.3% from last July, as electricity prices are still averaging 4.2% higher than a year ago…

Meanwhile, the seasonally adjusted food price index was 0.1% higher in July, after being 0.2% higher in June, 0.2% higher in May, 0.5% higher in April, unchanged in March, 0.4% higher in February, 0.2% higher in January, 0.7% higher in December, 0.1% higher over the two months ending November, and after being 0.2% higher in September, 0.4% higher in August, and unchanged last July, and is still 3.0% higher than a year ago….the price index for food purchased for use at home was 0.1% lower in July, while the price index for food bought to eat away from home was 0.3% higher, as average prices at fast food outlets rose 0.4% and average prices at full service restaurants rose 0.2%, while the price index for food at employee sites and schools was 0.5% higher, and prices for other food away from home averaged 1.0% higher…

In the food at home categories, the price index for cereals and bakery products was 0.2% higher, a average bread prices rose 0.2%, the price index for breakfast cereal rose 1.0%, the price index for rice rose 0.9%. the price index for fresh cakes and cupcakes rose 2.8%, and the price index for cookies was 1.1% higher.…on the other hand, the price index for the meats, poultry, fish, and eggs food group was 0.7% lower, as the price index for beef and veal fell 0.8%, the price index for pork fell 1.5%, and fresh whole chicken prices were 0.8% lower….in addition, the seasonally adjusted price index for dairy products was 0.1% lower, even as average milk prices rose 0.5%, as the price index for cheese and related products was 1.0% lower….at the same time,, the fruits and vegetables price index was 0.1% lower, as the price index for fresh vegetables fell 2.6%, the price index for canned fruits fell 2.9%, and the price index for canned vegetables was 0.4% lower.…meanwhile, the beverages price index was 0.9% higher, as the price index for carbonated drinks rose 0.2%, the price index for noncarbonated juices and drinks rose 1.5%, and the price index for beverage materials other than coffee but including tea was 1.1% higher….lastly, the price index for the ‘other foods at home’ category was unchanged, as the price index for sugar and sweets rose 0.5%, and the price index for margarine was 2.9% higher, and the price index for baby food and formula was 0.7% higher, while the price index for salad dressing fell 2.7%, the price index for frozen and freeze dried prepared foods fell 0.7%, and the price index for prepared salads was 1.0% lower…

Among the seasonally adjusted core components of the CPI, which was 0.2% higher in July, after being unchanged in June, after rising by 0.2% in May, by 0.4% in April, 0.2% in March, by 0.2% in February, by 0.3% in January, by 0.2% in December, by 0.2% over the 2 months ending in November, and by 0.3% in August, and by 0.3% last July, the composite price index of all goods less food and energy goods was 0.2% higher in July, while the more heavily weighted composite index for all services less energy services was also 0.2% higher..

Among the goods components of the core price index, which will initially be used by the Bureau of Economic Analysis to adjust June’s retail sales for inflation in national accounts data, the price index for household furnishings and supplies was 0.1% higher, as the price index for bedroom furniture rose 1.0%, the price index for appliances rose 0.8%, the price index for outdoor equipment and supplies rose 0.7%, the price index for household cleaning products rose 0.3%, and the price index for household paper products was 0.9% higher….at the same time, the apparel price index was 0.1% higher, on a 2.9% increase in the price index for women’s outerwear, a 1.6% increase in the price index for boys’ apparel, a 2.2% increase in the price index for jewelry and watches, and a 1.1% increase in the price index for men’s footwear…. in addition, the price index for transportation commodities other than fuel was was 0.2% higher, as average prices for new vehicles rose 0.1%, average prices for used cars and trucks were 0.4% higher, and the price index for vehicle accessories other than tires was 2.5% higher….on the other hand, the price index for medical care commodities was 0.6% lower, as the price index for prescription drugs fell 0.8%, the price index for nonprescription drugs fell 0.3%, and the price index for medical equipment and supplies was 1.6% lower…however, the recreational commodities index was 0.6% higher, as the price index for televisions rose 1.7%,the price index for video equipment other than televisions rose 2.1%, the price index for sports vehicles including bicycles rose 0.5 %, the price index for pets and pet products rose 0.7%, the price index for recreational books rose 4.9%, and the price index for toys, games, hobbies and playground equipment was 0.7% higher… at the same time, the education and communication commodities index was 1.3% higher, as the price index for computers, peripherals, and smart home assistants rose 3.5%, the price index for educational books and supplies rose 0.8%, and the price index for telephone smartphones was 1.1% higher.…lastly, a separate price index just for alcoholic beverages was 0.2% higher, while the price index for ‘other goods’ was 0.4% higher on a 0.5% increase in the price index for tobacco and smoking products, a 0.6% increase in the price index for cosmetics, perfume, bath, nail preparations and implements, and a 0.5% increase in the price index for miscellaneous personal goods…

Within core services, the price index for shelter was 0.1% higher, as rents rose 0.1%, and homeowner’s equivalent rent rose 0.3%, but prices for lodging away from home at hotels and motels were 3.3% lower, while the price index for tenants and household insurance was 0.1% lower, and the price index for water, sewer and trash collection services was 0.4% higher… in addition, the price index for medical care services was 0.6% higher, as price index for hospital services rose 0.5%, the price index for dental’ services rose 0.5%, but the price index for health insurance was 0.2% lower…at the same time, the transportation services price index was 0.3% higher, as the price index for airline fares rose 2.2%, the price index for intracity transportation including mass transit rose 1.2% and the price index for motor vehicle maintenance and repair rose 0.6%, while the price index for motor vehicle insurance was 0.3% lower….meanwhile, the recreation services price index was unchanged, as the price index for purchase, subscription, and rental of video rose 2.0%, but the price index for admission to sporting events was 2.0% lower…meanwhile, the price index for education and communication services was 0.5% higher, as the price index for college tuition and fees rose 0.7% and the price index for telephone services was 0.6% higher.…lastly, the price index for other personal services was 0.5% lower, as the price index for checking account and other bank services fell 2.0%,  the price index for laundry and dry cleaning rose 0.5%, and the price index for tax return preparation and other accounting fees was 0.4% lower…

Retail Sales Fell 0.6% in July After May and June Sales were Revised Lower

Seasonally adjusted retail sales fell 0.6% in July after retail sales for May and June were revised lower….the Advance Retail Sales Report for July (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $763.6 billion during the month, which was down 0.6 percent (±0.4 percent) from June’s revised sales of $768.1 billion, but was 5.0 percent (±0.5 percent) above the adjusted sales in July of last year…June’s seasonally adjusted sales were revised almost 0.1% lower, from the $768.6 billion reported last month to $768.1 billion, while May sales were also revised nearly 0.1% lower, from $766.9 billion to $766.2 billion, and as a result the rounded June sales percentage increase was “unrevised from up 0.2 percent (±0.3 percent)*”….estimated unadjusted sales, extrapolated from a survey of a small sampling of retailers, indicated sales actually rose 0.9%, from $777,641 million in June to $784,610 million in July, while they were up 5.2% from the $745,651 million of sales in July a year ago…

Combined, the downward revisions to May and June sales indicate that the 2nd quarter’s adjusted sales were roughly $1.2 billion lower than was previously reported, a revision which would subtract about $4.8 billion to the BEA’s annual rate calculation of 2nd quarter personal consumption expenditures, before any inflation adjustments….That revision should be enough to lower 2nd quarter GDP by around 0.07 percentage points when the 2nd estimate is published at the end of the month…

Included below we have the table of the monthly and yearly percentage changes in retail sales by business type taken from the July Census pdf….the first double column below gives us the seasonally adjusted percentage change in sales for each type of retail business from June to July in the first sub-column, and then the year over year percentage change for those businesses since last July in the 2nd column; the second pair of columns gives us the revision of last month’s June advance monthly estimates (now called “preliminary”) as revised in this report, likewise for each business type, with the May to June change under “May 2026 (r)evised” and the revised June 2025 to June 2026 percentage change in the last column shown…should you want to check which sales metrics were most revised, our saved copy of the table of last month’s advance June sale estimates, before this month’s revision, is here….

To compute July’s real personal consumption of goods data for national accounts from this July retail sales report, the BEA will initially use the corresponding price changes from the July consumer price index, which we reviewed above….to estimate what they will find, we’ll first remove the usually volatile sales of gasoline from the other totals…from the third line on the above table, we can see that July retail sales, excluding the 0.9% decrease in sales at gas stations, were also down by 0.6%….then, subtracting the figures representing the unchanged grocery & beverage sales and the 0.5% increase in food services sales from that total, we find that core retail sales were down by almost 0.9% over the month…since the July CPI report showed that the the composite price index of all goods less food and energy goods was 0.2% higher in July, we can thus figure that real retail sales excluding food and energy, or real core PCE, would show a decrease of about 1.1% for the month….however, the actual adjustment in national accounts 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 motor vehicle & parts dealers were down 1.8%, the July price index for transportation commodities other than fuel was 0.2% higher, which would suggest that real sales at auto & parts dealers were actually about 2.0% lower, once higher prices are taken into account… similarly, while nominal sales at clothing stores were 1.9% higher in July, the apparel price index was 0.1% higher, which would suggest that real sales of clothing were up around 1.8%…

In addition to figuring those core retail sales, to make a complete estimate of July’s real PCE, we’ll need to adjust food and energy retail sales for their price changes separately, just as the BEA will do…the July CPI report showed that the food price index 0.1% higher, as the price index for food purchased for use at home fell 0.1% while the index for food bought away from home was 0.3% higher…thus, while nominal sales at food and beverage stores were virtually unchanged, real sales of food and beverages would have been around 0.1% higher in light of the concurrent 0.1% decrease in prices…at the same time, the 0.5% increase in nominal sales at bars and restaurants, once adjusted for 0.3% higher prices, suggests that real sales at bars and restaurants only rose by around 0.2% during the month…meanwhile, while sales at gas stations were down 0.9%, the price of gasoline was reported to be 2.9% lower during the month, which would suggest that real sales of gasoline were actually almost 2.1% higher for the month, with a caveat that gasoline stations do sell more than gasoline, products which should not be adjusted with gasoline prices…by reweighing and averaging the real sales changes that we have thus estimated back together, and excluding food services, we can then estimate that the income and outlays report for July will show that our real personal consumption of goods fell by almost 0.7% in July*, after a revised 0.6% increase in June, and a revised 0.5% increase in May, but after falling 0.2% April, after rising by 0.9% in March, rising by 0.8% in February and falling by 0.6% in January….at the same time, the 0.2% increase in real sales at bars and restaurants could add a basis point to July’s real personal consumption of services… (*Note: we again have a low confidence in that result because of the unlikely 2.1% increase in gasoline consumption implied by the figures; without gasoline, our estimate would show that July’s real PCE goods would be more than 0.8% lower)

Producer Price Index Unchanged in July as Lower Energy & Transportation Prices Offset Higher Core Services

The seasonally adjusted Producer Price Index (PPI) for final demand was unchanged  in July, as the final demand price index for wholesale goods fell 0.7%, while the more heavily weighted price index for final demand for services was 0.2% higher…that flat July PPI reading followed a revised 0.1% decrease in June, when the final demand price index for wholesale goods fell 1.4%, while the price index for final demand for services was 0.5% higher, and followed a revised 0.5% PPI increase in May, when the final demand price index for wholesale goods rose 2.3%, while price index for final demand for services was 0.3% lower, and followed a revised 1.1% increase in April, when the final demand price index for wholesale goods rose 1.9% and the price index for final demand for services was 0.8% higher, and a revised 0.8% increase in March, when the final demand price index for wholesale goods rose 2.0%, while the price index for final demand for services was 0.3% higher, and followed an unrevised 0.5% increase in February, when the final demand price index for wholesale goods was 1.0% higher, and the price index for final demand for services was 0.3% higher, and an unrevised 0.6% increase in January, when the final demand price index for wholesale goods was 0.1% lower, but the price index for final demand for services was 0.9% higher, and an unrevised 0.4% PPI increase in December, when the final demand price index for wholesale goods was 0.1% lower, while the price index for final demand for services was 0.6% higher, and a  0.4% PPI increase in November, when the final demand price index for wholesale goods was 0.8% higher, and the price index for final demand for services was 0.3% higher, and followed the report of a 0.1% PPI increase in October, when the final demand price index for wholesale goods fell 0.2%, but the more heavily weighted price index for final demand for services was 0.2% higher, and also followed a 0.6% PPI increase last September, when the final demand price index for wholesale goods rose 0.6% and the price index for final demand for services was also 0.6% higher….those post-shutdown reports followed a revised 0.2% decrease last August, when the final demand price index for wholesale goods rose 0.2%, but the more heavily weighted price index for final demand for services was 0.3% lower, and also followed a revised 0.8% increase last July, when the final demand price index for wholesale goods rose 0.6% and the price index for final demand for services was was 0.9% higher….on an unadjusted basis, producer prices are 4.7% higher than a year ago, while the core producer price index, which excludes food, energy and trade services, was 0.4% higher for the month. and is still 4.7% higher than it was a year ago…

As noted, the producer price index for final demand for goods was 0.7% lower in July, after being 1.4% lower in June, 2.3% higher in May, 1.9% higher in April, 2.0% higher in March, 1.0% higher in February, 0.1% lower in January, 0.1% lower in December, 0.8% higher in November, 0.1% lower in October, 0.6% higher in September, 0.2% lower last August, and 0.6% higher last July, and is still 6.5% higher than a year ago….the final demand goods price index was 0.7% lower in July because the price index for wholesale energy goods was 3.1% lower, after energy prices had been 6.5% lower in June, 8.2% higher in May, 7.2% higher in April, 10.2% higher in March, 2.0% higher in February, and 1.7% lower in January,  and because the price index for wholesale foods was 0.9% lower, after wholesale foods had been had been 0.5% lower in June, 0.6% higher in May, 0.2% higher in April, 0.6% lower in March, 2.3% higher in February, and 1.1% lower in January, and as the price index for final demand for core wholesale goods (excluding food and energy) was 0.1% higher in July, after it had been 0.2% higher in June, 0.7% higher in May, 0.7% higher in April, 0.3% higher in March, 0.4% higher in February. and 0.7% higher in January….

Wholesale energy prices were 3.1% lower in June on a 5.7% decrease in wholesale prices for gasoline, a 6.7% decrease in wholesale prices for No. 2 diesel fuel, and a 9.8% decrease in wholesale prices for natural gas liquids, while the final demand for food price index was 0.9% lower on a 34.9% decrease in the wholesale price index for fresh and dry vegetables and a 15.3% decrease the wholesale price index for processed turkeys… among core wholesale goods, the wholesale price index for transformers and power regulators rose 4.2%, the wholesale price index for food products machinery rose 1.2%, the wholesale price index for electronic computers and computer equipment rose 1.1%, and the wholesale price index for pumps, compressors, and equipment was also 1.1% higher…

Meanwhile, the price index for final demand for services was 0.2% higher in July, after being 0.5% higher in June, 0.3% lower in May, 0.8% higher in April, 0.3% higher in March, 0.3% higher in February, 0.9% higher in January, 0.6% higher in December, 0.2% higher in November, 0.2% higher in October, 0.6% higher in September, 0.3% lower last August, and 0.9% higher last July, and is thus 3.9% higher than a year ago….the price index for final demand for trade services slipped 0.1% in July, and the price index for final demand for transportation and warehousing services fell 1.8%, but the core index for final demand for services other than trade, transportation, and warehousing services was 0.6% higher….

Among trade services, seasonally adjusted margins for lawn, garden, and farm equipment and supplies retailers rose 21.3%, margins for TV, video, and photographic equipment and supplies retailers were 31.0% higher, and margins for computer hardware, software, and supplies retailers were 11% higher, while margins for furniture retailers fell 1.8%  and margins for machinery and vehicle wholesalers were 9.0% lower….among transportation and warehousing services, average margins for truck transportation of freight fell 1.8%, margins for air transportation of freight fell 1.6%, and margins for airline passenger services were 3.4% lower….among the components of the core final demand for services index, the price index for portfolio management rose 6.5%, the price index for cable and satellite subscriber services rose 2.9%, the price index for arrangement of vehicle rentals and lodgings rose 2.7%, the price index for arrangement of cruises and tours rose 2.4%, and the price index for management, scientific, and technical consulting services was 3.3% higher…

This report also showed the price index for intermediate processed goods was 1.2% lower in June, after being 1.1% lower in June, 2.9% higher in May, 2.7% higher in April, 3.0% higher in March, 1.5% higher in February, 0.1% higher in January, 0.1% higher in December, 0.6% higher in November, 0.1% lower in October, 0.2% higher in September, 0.4% higher last August, and 0.7% higher last July….the price index for intermediate energy goods fell 3.1% in July as refinery prices for gasoline fell 5.7%, refinery prices for No. 2 diesel fuel fell 6.7%, refinery prices for jet fuel fell 15.2%, and producer prices for natural gas liquids were 9.8% lower….at the same time, the price index for intermediate processed foods and feeds fell 0.5%, as the producer price index for prepared animal feeds fell 1.4%, the producer price index for meats fell 1.7%, the producer price index for refined sugar and byproducts fell 1.5%, and the producer price index for dairy products was 0.3% lower… on the other hand, the core price index for intermediate processed goods less food and energy goods was 0.1% higher, as the producer price index for industrial gases rose 2.1%, the producer price index for paper boxes and containers rose 1.9%, the producer price index for softwood lumber rose 8.2%, the producer price index for switchgear, switchboard, and industrial controls equipment rose 1.5%, the producer price index for steel mill products rose 3.9%, and the producer price index for nonferrous foundry shop products was 2.0% higher….average prices for intermediate processed goods are still 9.9% higher than in July 2025, the 21st year over year increase in 41 months, but are way off the 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 1.8% in July, after falling 6.4% % in June, rising 3.2% in May and 1.7% in April, falling 0.2% in March, rising 5.9% in February, rising 4.3% in January, and 2.1% in December and 2.4% in November, after falling 1.3% in October, falling 0.5% in September, and falling 1.8% last August….that was as the July price index for crude energy goods fell 7.4%, as crude oil prices fell 11.9%, unprocessed natural gas prices rose 10.4%, and coal prices were 1.2% higher… meanwhile, the price index for unprocessed foodstuffs and feedstuffs was 0.7% higher, as the producer price index for wheat rose 9.3%, the producer price index for corn rose 16.7%, the producer price index for oilseeds rose 9.5%, and the producer price index for hay and hayseeds was 12.7% higher….at the same time, the index for core raw materials other than food and energy materials was 1.6% higher, on an 11.0% increase in the price index for raw cotton, a 5.8% increase in the price index for aluminum base scrap, and a 1.5% increase in the price index for iron and steel scrap….this raw materials price index is still 7.1% higher than a year ago, the 17th year over year increase in the past 42 months, which followed a run of 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 0.3% higher in June, after being 0.7% higher in June, 0.4% higher in May, 0.9% higher in April, 0.1% higher in March, 0.3% higher in February, 0.6% higher in January, 0.6% higher in December, 0.2% higher in November, 0.4% higher in October, 0.3% higher in September, unchanged last August, and 0.6% higher last July.…the price index for intermediate trade services was 0.7% higher, as margins for metals, minerals, and ores wholesalers rose 5.5%, margins for intermediate automotive parts, including tire retailers, rose 6.6%, and margins for intermediate food wholesalers rose 3.2%….on the other hand, the price index for transportation and warehousing services for intermediate demand was 0.5% lower, as the intermediate price index for truck transportation of freight fell 1.8%, the intermediate price index for air transportation of freight fell 1.6%, the intermediate index for air mail and package delivery services, excluding by USPS, fell 1.9%, and the intermediate index for transportation of passengers was 3.4% lower….meanwhile, the core price index for intermediate services other than trade, transportation, and warehousing services was 0.6% higher, as the intermediate price index for securities brokerage, dealing, investment advice, and related services rose 3.1%, the intermediate price index for portfolio management rose 6.5%, the intermediate price index for internet advertising time sales rose 4.9%, and the intermediate price index for executive search services was 9.6% higher….over the 12 months ended in July, the price index for services for intermediate demand was 5.1% higher than it was a year earlier, the sixty-ninth consecutive annual increase in this index, after it had briefly turned negative year over year at the onset of the pandemic, from April to August of 2020, even as the current annual increase is still lower than the record 9.5% year over year increase that was indicated for July 2021…

June Business Sales Fell 1.1%, Business Inventories Virtually Unchanged, Less than in Q2 GDP Estimate

Following the release of the July retail sales report, the Census Bureau released the composite Manufacturing and Trade Inventories and Sales report for June (pdf), which incorporates the revised June retail data from that July retail report and the earlier published wholesale and factory data to give us a composite 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 $2,111.3 billion in June, down 1.1 percent (±0.2 percent) from May’s revised sales, but up 10.0 percent (±0.3 percent) from June sales of a year earlier…note that total May sales were revised from the originally reported $2,135.0 billion to $2,135.5 billion, which was still 2.1% higher than April..….manufacturer’s adjusted sales were down 0.2% to $652,143 million in June, while retail trade sales, which exclude restaurant & bar sales from the revised June retail sales reported earlier, were up 0.2% to $665,054 million, but wholesale trade sales were down 3.0% to $794,101 million…

Meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $2,740.2 billion at the end of June, virtually unchanged (±0.1 percent)* from May, but 3.0 percent (±0.5 percent) higher than in June of last year…the value of end of May inventories was revised up from the $2,736.2 billion reported last month to $2,739.2 billion, and are now shown to be be 0.4% higher than April…seasonally adjusted inventories of manufacturers were estimated to be valued at $962,917 million at the end of June, up 0.1% from the end of May, inventories of retailers were valued at $832,612 million, 0.2% less than at the end of May, while inventories of wholesalers were estimated to be valued at $944,710 million at the end of June, up 0.2% from May…

Last week, we estimated that there could be a 0.01 percentage point upward revision to second quarter GDP based on the inventory change the June factory report showed, while at the same time, we figured that 2nd quarter GDP was overestimated by around 0.09 percentage points based on what the wholesale inventories report showed……in the advance report on 2nd quarter GDP of two weeks ago, retail inventories were estimated based on the sketchy Advance Report on Wholesale and Retail Inventories, which was released the day before the GDP release…that report estimated that our seasonally adjusted retail inventories were valued at $831,274 million at the end of June, virtually unchanged from a revised $831,373 million in May….that’s $4.017 billion less than the $832,612 and $834,052 million for those two months that this report shows, which would mean that the quarterly change in 2nd quarter retail inventories was underestimated at roughly a $16.1 billion annual rate, or by an amount that would add about 0.21 percentage points to 2nd quarter GDP, give or take, depending on how the inflation adjustments shake out…combined with our previous estimates on revisions to factory and wholesale inventories, then, this report would suggest that the growth rate of 2nd quarter GDP would need to be revised upwards by around 0.13 percentage points when the 2nd estimate is released two weeks hence….

Existing Home Sales Fell 1.7% in July on Lower Prices

The National Association of Realtors (NAR) reported that their seasonally adjusted count of existing home sales fell 1.7% from June to July, projecting that 4.06 million homes would sell over an entire year if the July home sales pace were extrapolated over that year, a pace that was still 0.7% above the annual sales rate projected for July of a year ago….June home sales were revised from the 4.09 million annual rate shown in last month’s report to a 4.13 million rate, but were still down 1.4% from May….the NAR also reported that the median sales price for all existing-home types was $434,100 in July, 0.2% higher than in July a year earlier, which they report marked “the 37th consecutive month of year-over-year price increases.“…..the NAR press release, which is titled “NAR Existing-Home Sales Report Shows 1.7% Decrease in July“, is in easy to read plain English, so if you’re interested in the details on housing inventories, cash sales, distressed sales, first time home buyers, etc., you can easily find them in that press release….since 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…

Since this report is entirely seasonally adjusted and at a not very informative annual rate, we usually look at the raw data overview (pdf), which gives us a close approximation of the actual number of homes that sold each month…this unadjusted data indicates that roughly 400,000 homes sold in July, down by 5.7% from the 424,000 homes that sold in June, but up by 2.8% from the estimated 389,000 homes that sold in July of last year, so we can see there was a modest upward seasonal adjustment to bring the annualized published figures up to the level reported…that same pdf indicates that the median home selling price for all housing types fell 2.0%, from a revised $442,800 in June to $434,100 in July, while the regional median home sales prices ranged from a low of $342,900 in the Midwest to a high of $622,200 for homes in the West…

(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 chosen from the aforementioned GGO posts, contact me…)

US oil imports at a 20 month high, supplies rise by most in 43 months; record distillates exports, supplies at a 30 year low

US oil imports at a twenty month high add to largest commercial crude inventory build in three and a half years; Strategic Petroleum Reserve now the lowest since it was initially being filled in January 1983… US distillates exports at an all-time high lead to lowest summertime distillate inventories in 30 years…US gasoline supplies at a 38 week low..

US oil prices rose for the first time in three weeks despite the largest US crude inventory build in three and a half years on increasingly belligerent exchanges between Trump and Iran and on attacks on oil tankers in the Red Sea and in & around the Strait of Hormuz…after falling 9.2% to $78.18 a barrel last week as Iran and Oman appeared to be close to finalizing a bilateral deal to manage ship traffic through the Strait of Hormuz, which could have allowed for the relatively unrestrained flow of Persian Gulf oil to global markets for the first time since February, the contract price for the benchmark US light sweet crude for September delivery opened higher on Asian markets on Monday as lingering uncertainty over reopening of the Strait of Hormuz sent fresh jitters through energy markets, then steadied after ​those early gains faded, as progress on talks to reopen the Strait of Hormuz was clouded by continued demands from Iran, then surged as markets opened in the US after Iran called on the U.S. to meet certain conditions, including paying war reparations and ending sanctions and military threats, and settled $3.95 or 5% higher at $82.13 a barrel​, as uncertainty increased over whether the United States and Iran could reach a deal to increase shipping traffic through the Strait of Hormuz, reversing some of last week’s losses which were predicated on​ such a deal….oil prices rose more than 2% across global markets on Tuesday, as hopes for a US-Iran agreement to end the war and reopen the Strait of Hormuz faded after President Donald Trump demanded compensation from Tehran, then dipped Tuesday morning in New York following media reports that negotiations over the Strait of Hormuz between Iran and Oman had reached an advanced stage, but still settled $1.07 higher at $83.20 a barrel as traders grew more pessimistic about a potential deal to bring stability to the Middle East and reopen Hormuz….oil prices rose ​again during Asian trading on Wednesday morning after deadly attacks on vessels in the Red Sea and Gulf of Oman heightened concerns over the security of major global shipping routes, and continued to edge higher during early US trading after a senior Iranian source told Reuters there were no discussions between Iran and the U.S. to extend their ceasefire because, from Tehran’s perspective, there was nothing to extend, but sold off after the EIA reported the largest crude oil inventory build since January 2023, but still settled 7 cents higher at $83.27 a barrel as traders parsed a barrage of data from leading energy forecasters amid little sign of a breakthrough between Iran and the US over the Strait of Hormuz….oil prices fell in Asian trading on Thursday, weighed down by cuts to 2026 oil demand forecasts from both OPEC and the International Energy Agency, but swung in volatile trading across global markets, driven by escalating rhetoric between Washington and Tehran over the Strait of Hormuz, then traded lower during the US session as traders weighed the lower demand outlooks by the IEA and OPEC and the large build in crude inventories reported on Wednesday against the lack of progress in talks over the Strait of Hormuz, and settled $2.02 lower at $81.25 a barrel as traders focused on signs of weaker global demand and the sharp build in U.S. crude inventories…oil prices rose during Asian trading Friday, following a U.S. threat to indefinitely blockade Iran, reversing earlier declines caused by weakened demand expectations, then continued to climb during early US trading over renewed attacks on tankers and a war of words between the Trump administration and Iran’s leadership, and settled $1.15 higher at $82.40 a barrel on​ those tanker attacks and ​on a lack of progress towards peace between the Trump administration and Iran’s leadership, and thus ​finished up 5.4% for the week…

at the same time, natural gas prices finished higher for the first time in seven weeks as weather models showed exceptional heat building across the southern US….after falling 3.1% to $2.662 per mmBTU last week on diminishing cooling demand and a larger-than-expected injection of gas into storage, the price of the benchmark natural gas contract for September delivery opened 9.5 cents higher on Monday, as a bullish shift to short-term cooling demand over the weekend helped the contract hit an intraday high of $2.806 multiple times throughout the session, before settling 13.2 cents higher at $2.794 per mmBTU as record natural gas short positions ran headlong into the summer’s biggest weekend jump in forecast demand, igniting a short covering rally in futures as traders raced to cover​ their bearish bets that had built up over five straight weekly losses….the September contract opened 0.6 cents higher on Tuesday, but spent the rest of the morning trending lower to stabilize near $2.760, as traders seemed comfortable with that price level​, in spite of the impending increase in cooling demand, and settled 2.7 cents lower at $2.767 per mmBTU amid plump supply readings and profit-taking following ​t​he rare late 2026 summer rally at the start of the week….natural gas prices advanced early Wednesday after overnight weather models added heat to an already bullish outlook, even though robust inventories and weaker power burn tempered the upside, and settled 3.7 cents higher at $2.804 per mmBTU as bulls welcomed near-term cooling demand ​w​hile the market overall braced for updated storage data that was projected to show abundant supplies….natural gas futures retreated early Thursday as traders awaited government storage data that was expected to show another near-normal injection, even as forecasts maintained an exceptionally hot pattern through late August, then tumbled to settle 7.7 cents lower at $2.727 per mmBTU following an EIA inventory report that proved bearish relative to historical norms and to market expectations….natural gas prices advanced early Friday as hotter overnight weather trends helped prices regain ground following Thursday’s bearish storage surprise, and settled 0.6 cents higher at $2.733 per mmBTU after weather models trended warmer for late summer in the southern states and LNG export flows from the US Gulf Coast increased, reducing the gas volume available for the domestic market and leaving natgas prices 2.7% higher for the week….

The EIA’s natural gas storage report for the week ending August 7th indicated that the amount of working natural gas held in underground storage rose by 36 billion cubic feet to 3,153 billion cubic feet by the end of the week, which left our natural gas supplies 25 billion cubic feet, or 0.8% below the 3,178 billion cubic feet of gas that were in storage on August 7th of last year, but 198 billion cubic feet, or 6.7% above the five-year average of 2,955 billion cubic feet of natural gas that had typically been in working storage as of the 7th of August over the most recent five years….the 36 billion cubic foot injection into natural gas storage for the cited week was more than the 33 billion cubic foot injection into storage that the market had been expecting ahead of the report, but it was considerably less than the 49 billion cubic foot of gas that were injected into natural gas storage during the corresponding week of 2025, while also more than the average 33 billion cubic foot injection into natural gas storage that had been typical for the first week in August over the past five 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 August 7th showed that after a near record increase in our oil imports and a drop in our oil exports, we had surplus oil to add to our stored crude supplies for the first time in sixteen weeks, and for the 26th time in sixty-three weeks, as an increase in oil supplies that the EIA could not account for contributed to the surplus…. Our imports of crude oil rose by an average of 1,140,000 barrels per day to a twenty month high of 7,339,000 barrels per day, after rising by an average of 515,000 barrels per day during the prior week, while our exports of crude oil fell by an average of 627,000 barrels per day to average 3,058,000 barrels per day, which, when used to offset our imports, meant that the net of our trade of oil worked out to an import average of 4,281,000 barrels of oil per day during the week ending August 7th, an average of 1,767,000 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 supplies from Alaskan gas liquids, from natural gasoline, from condensate, and from unfinished oils was the same as the prior week at 223,000 barrels per day, while during the same week, production of crude from US wells was 1,000 barrels per day higher at 13,805,000 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 total of 18,309,000 barrels per day during the August 7th reporting week…

Meanwhile, US oil refineries reported they were processing an average of 17,179,000 barrels of crude per day during the week ending August 7th, an average of 26,000 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 net of 1,615,000 barrels of oil per day were added to the supplies of oil stored in the US… So, based on all that reported & estimated data, the crude oil figures provided by the EIA appear to indicate that our total working supply of oil from net imports, from transfers, and from oilfield production during the week ending August 7th averaged a rounded 486,000 fewer barrels per day than what was added to storage plus our oil refineries reported they used during the week.  To account for the difference between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a [ +486,000 ] 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 indicating there must have been a error or omission of that amount in the week’s oil supply & demand figures that we have just transcribed…. In addition, since 561,000 barrels per day of oil supply could not be accounted for in the prior week’s EIA data, that means there was a 75,000 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…. However, since most oil traders react to to the figures in these weekly EIA reports as if they were gospel, 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 supply, see this EIA explainer….also see this March 2023 twitter thread from an EIA administrator addressing these ongoing weekly errors, and what they had once hoped to do about it).

This week’s net 1,615,000 barrel per day average increase in our overall crude oil inventories came as an average of 2,489,000 barrels per day were being added to our commercially available stocks of crude oil, the largest commercial oil inventory increase since January 2023, while 874,000 barrels per day were being pulled out of our Strategic Petroleum Reserve, the twentieth consecutive Iran war related withdrawal from the SPR, including the four largest draws in SPR history, which left the SPR level at 298,694,000 barrels, the lowest since it was initially being filled in January 1983….

Further details from the weekly Petroleum Status Report (pdf) indicated that the 4 week average of our oil imports rose to 6,257,000 barrels per day last week, which was 0.1% more than the 6,249,000 barrel per day average that we were importing over the same four-week period last year, while the four week average of our exports fell to 3,391,000 barrels per day last week, which was still 0.9% more than the 3,362,000 barrel per day average that we were exporting last year year at this time… This week’s crude oil production was reported to be 1,000 barrels per day higher at 13,805,000 barrels per day as the EIA’s estimate of the output from wells in the lower 48 states was 25,000 barrels per day higher at 13,401,000 barrels per day, while Alaska’s oil production was 24,000 barrels per day lower at 404,000 barrels per day…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 was 5.4% higher than that of our pre-pandemic production peak, and was also 42.3% 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 96.2% of their capacity while processing those 17,179,000 barrels of crude per day during the week ending August 7th, down from 96.5% the prior week, but still above the recent normal utilization for this or for any time of year….the 17,179,000 barrels of oil per day that were refined that week were virtually unchanged from the 17,180,000 barrels of crude that were being processed daily during the week ending August 8th of 2025, but were 0.7% less than the 17,302,000 barrels that were being refined during the pre-pandemic week ending August 9th, 2019, when our refinery utilization rate was at 94.8%, which was close to the pre-pandemic normal utilization rate for this time of year…

Even with the small increase in the amount of oil that was being refined this week, gasoline output from our refineries was a bit lower, decreasing by 1,000 barrels per day to 9,568,000 barrels per day during the week ending August 7th, after our refineries’ gasoline output had decreased by 309,000 barrels per day during the prior week… This week’s gasoline production was 2.5% lower than the 9,813,000 barrels of gasoline that were being produced daily over the week ending August 8th of last year, and 6.2% less than the gasoline production of 10,203,000 barrels per day seen during the prepandemic week ending August 9th, 2019….on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 50,000 barrels per day to 5,280,000 barrels per day, after our distillates output had decreased by 144,000 barrels per day during the prior week.  With that increase, our distillates output was 2.5% more than the 5,137,000 barrels of distillates that were being produced daily during the week ending August 8th of 2025, and 4.0% more than the 5,077,000 barrels of distillates that were being produced daily during the pre-pandemic week ending August 9th, 2019….

With this week’s gasoline production barely changed, our supplies of gasoline in storage at the end of the week fell for the 21st time in twenty-six weeks, decreasing by 968,000 barrels to a thirty-eight week low of 208,690,000 barrels during the week ending August 7th, after our gasoline inventories had decreased by 1,643,000 barrels during the prior week.  Our gasoline supplies fell by less this week because the amount of gasoline supplied to US users fell by 67,000 barrels per day to 8,964,000 barrels per day, and because our imports of gasoline rose by 120,000 barrels per day to 583,000 barrels per day, while our exports of gasoline rose by 45,000 barrels per day to 852,000 barrels per day… After fifty-two gasoline inventory withdrawals over the past seventy-seven weeks, our gasoline supplies were 7.8% lower than last August 8th’s gasoline inventories of 226,290,000 barrels, and about 6% below the five year average of our gasoline supplies for this time of year…

After this week’s decrease in distillates production, our supplies of distillates fell for the twelfth time in twenty-seven weeks, but only by 10,000 barrels to 107,149,000 barrels during the week ending August 7th, but still the lowest summertime level in thirty years, after our distillates supplies had decreased by 3,473,000 barrels to that level during the prior week… Our distillates supplies fell by less this week because the amount of distillates supplied to US markets, an indicator of domestic demand, fell by 483,000 barrels per day to 3,458,000 barrels per day, and even while our exports of distillates rose by 51,000 barrels per day to an all-time high of 1,935,000 barrels per day, while our imports of distillates rose by 13,000 barrels per day to 111,000 barrels per day… After 27 withdrawals from distillates inventories over the past 58 weeks, our distillates supplies at the end of the week were 5.2% lower than the 112,971,000 barrels of distillates that we had in storage on August 8th of 2025, and were about 12% below the five year average of our distillates inventories for this time of the year…

Finally, after the increase in our oil imports and the decrease in our oil exports, and with the big withdrawal from the SPR, our commercial supplies of crude oil in storage rose for the 13th time in twenty-six weeks, and for the 26th time over the past year, increasing by 17423,000 barrels over the week, from 406,987,000 barrels on July 31st to 424,410,000 barrels on August 7th, the largest weekly increase since January 6th 2023, after our commercial crude supplies had increased by 2,479,000 barrels from a 94 month low over the prior week….After this week’s big increase, our commercial crude oil inventories were still about 2% below the recent five-year average of commercial oil supplies for this time of year, while they were still 26.7% above the average of our available crude oil stocks as of the first weekend of August over the 5 years at the beginning of the past decade, with the 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 in the Spring of 2020, then jumped again after February 2021’s winter storm Uri froze off US Gulf Coast refining, but then fell sharply due to increased exports to Europe following the onset of the Ukraine war, only to jump again following the Christmas 2022 refinery freeze-offs, changes in our commercial crude supplies had been less extreme up until the onset of the Iran war, when they were initially built up to a three year high by mid-April…However, after falling sharply over the past three months until this week, our commercial crude oil inventories as of August 7th were 0.5% below the 426,698,000 barrels of oil we had in commercial storage on August 8th of 2025, and were 1.5% less than the 430,678,000 barrels of oil that we had in storage on August 9th of 2024, and 4.8% less than the 445,622,000 barrels of oil we had left in commercial storage on August 4th of 2023…

This Week’s Rig Count

The US rig count increased by five over the week ending August 14th, as the number of rigs targeting oil was up by one, the count of rigs targeting natural gas was up by four, and miscellaneous rigs were unchanged…for a quick snapshot of this week’s rig count, we are again including below a screenshot of the rig count summary table from Baker Hughes…in the table below, the first column shows the active rig count as of August 14th, the second column shows the change in the number of working rigs between last week’s count (August 7th) and this week’s (August 14th) count, the third column shows last week’s August 7th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday of the same week 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 Friday, the 15th of August, 2025…

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July’s jobs report; June’s trade deficit, construction spending, factory inventories, wholesale trade, and JOLTS

Major economic reports released the past week included the Employment Situation Summary for July and the Job Openings and Labor Turnover Survey (JOLTS) for June, both from the Bureau of Labor Statistics, and four June reports that included metrics which were only estimated in last week’s release of 2nd quarter GDP: the Commerce Department’s report on our International Trade for June, the June report on Construction Spending (pdf), the Full Report on Manufacturers’ Shipments, Inventories and Orders for June, and the June report on Wholesale Trade, Sales and Inventories, all of which were from the Census Bureau…

Privately issued reports included the ADP Employment Report for July, wherein the national payroll processor reported a 44,000 increase in private jobs in July, the light vehicle sales report for July from Wards Automotive, which is the source data for the BEA report, and which reported that vehicles sold at a 16.3 million annual rate in July, down the 16.4 million annual rate in June, and down from the 16.41 annual sales rate of July of 2025, and both of the widely watched purchasing manager’s surveys from the Institute for Supply Management (ISM): the July Manufacturing Report On Business indicated that the manufacturing PMI (Purchasing Managers Index) rose to 55.6% in July, up from 53.3% in June, and the highest reading since May 2022, which means that a larger plurality of manufacturing industry purchasing managers reported improving conditions in various facets of their business in July than in any month over the past four years, while the July 2024 Services Report On Business reported their Services PMI inched up to 54.1%, up from 54.0% in June, indicating that a modest plurality of service industry purchasing managers continued to report increases in various business metrics in July, at a rate similar to that in June..

Seasonally Adjusted Jobs Fell 23,000 in July, Unemployment Rate Fell to 4.1%

The Employment Situation Summary for July from the Bureau of Labor Statistics reported the first payroll jobs loss since February, major downward revisions to the job increases on May and June, and that the employment metrics from the household survey deteriorated at the same time, as fewer people sought work…seasonally adjusted estimates extrapolated from the establishment survey data projected that employers cut 23,000 jobs in July, after the payroll job increase for May was revised down by 66,000, from 129,000 jobs to 63,000 jobs, and the June jobs increase was revised down by 37,000, from 57,000 to 20,000 jobs….with those revisions, that means that this report indicates there were 126,000 fewer jobs in July than was reported last month, and also means that increases in seasonally adjusted non-farm payrolls have averaged 60.900 per month over the first seven months of 2025, compared to the average job increase of 85,300 per month over the first seven months of 2025, the average job increase of 202,400 per month over the first seven months of 2024, the average job increase of 257,700 per month over the first seven months of 2023, and the average 417,700 per month increase over the first seven months of 2022…..the unadjusted data shows that there were actually 1,099,000 fewer payroll jobs extant in July than in June, as the large seasonal job cutbacks associated with the end of the school year were normalized by the seasonal adjustments, but still left local government education jobs showing a 49,600 job seasonal adjusted decrease…

Outside of that and a 19,400 job loss in retail sales, seasonally adjusted job increases were largely in the goods producing sector, while the few job gains in the service sector were widely scattered..…since the BLS summary of the job gains by sector is clear and usually as detailed than our usual synopsis, we’ll just quote from that summary here:

• Total nonfarm payroll Total nonfarm payroll employment changed little in July (-23,000), following an average monthly gain of 34,000 over the prior 12 months. In July, employment declined in local government education and retail trade. Employment continued to trend up in health care. (See table B-1.)
• Employment in local government education declined by 50,000 in July, after showing little net change over the prior 12 months.
• Retail trade lost 19,000 jobs in July. Employment declined in warehouse clubs, supercenters, and other general merchandise retailers (-21,000) and in gasoline stations and fuel dealers (-5,000). Sporting goods, hobby, musical instrument, book, and miscellaneous retailers added 10,000 jobs. Retail trade employment had shown little net change over the prior 12 months.
• Employment in financial activities continued to trend down in July (-14,000), reflecting losses in credit intermediation and related activities (-9,000) and insurance carriers and related activities (-7,000). Financial activities employment is down by 121,000 since a recent peak in May 2025.
• In July, employment in health care continued its upward trend (+22,000) but at a slower pace than the average monthly gain over the prior 12 months (+36,000). Employment in ambulatory health care services continued to trend up over the month (+18,000).
• Employment showed little change over the month in other major industries, including mining, quarrying, and oil and gas extraction; construction; manufacturing; wholesale trade; transportation and warehousing; information; professional and business services; social assistance; leisure and hospitality; and other services.

The establishment survey also showed that average hourly pay for all employees rose by 2 cents an hour to $37.62 an hour in July, after it had increased by a revised 9 cents an hour in June; at the same time, the average hourly earnings of production and non-supervisory employees increased by 4 cents to $32.40 an hour…employers also reported that the average workweek for all private payroll employees was unchanged at 34.3 hours, and that hours for production and non-supervisory personnel was unchanged at 33.8 hours ….at the same time, the average manufacturing workweek was also unchanged at 40.4 hours, while average factory overtime was down by 0.1 hour to 3.1 hours..

Meanwhile, the seasonally adjusted extrapolation from the July household survey estimated that the number of those employed fell by 87,000 to 162,177,000, while the similarly estimated number of those counted as unemployed fell by 178,000 to 6,916,000, which thus meant that July saw a rounded decrease of 264,000 in the total labor force…since the working age population had grown by 116,000 over the same period, that meant the number of employment aged individuals who were not in the labor force rose by 381,000 to a record 106,189,000….meanwhile, the 264,000 decrease of those in the labor force was enough to lower the labor force participation rate, from 61.5% in June to 61.4% in July, which was also down from 62.2% in July of 2025 and the lowest since February 2021….at the same time, the decrease in number employed vis-a-vis the larger increase in the population was enough to lower the employment to population ratio, which we could think of as an employment rate, by 0.1% to 58.9%, its lowest since September 2021….

moreover, even with the decrease in the total labor force, the drop in those unemployed was enough to lower the unemployment rate from 4.2% to 4.1%, it’s lowest since last June….at the same time,the number who reported they were involuntarily working part time rose by 123,000 to 4,804,000 in July, which was enough to leave the alternative measure of unemployment, U-6, which includes those “employed part time for economic reasons”, unchanged at 7.9% in July, also matching the lowest rate since last June ….

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

Job Openings were Lower in June; Hiring and Job Quitting were Higher; Layoffs were Little Changed

The Job Openings and Labor Turnover Survey (JOLTS) report for June from the Bureau of Labor Statistics estimated that seasonally adjusted job openings fell by 178,000, from 77,537,000 in May to 7,359,000 in June, after May’s job openings were revised 57,000 lower, from 7,594,000 to 77,537,000 …however, June’s jobs openings were still 2.2% higher than the 7,204,000 job openings reported for June of a year ago, while the job opening ratio expressed as a percentage of the employed fell from 4.5% in May to 4.4% in June, but was up from the 4.3% rate of June a year ago…the greatest percentage drop in June job openings was in the wholesale trade sector, where openings fell by 74,000 to 165,000, while job openings with the federal government rose by 39,000 to 139,000 (see table 1 for details on other categories of job openings)…like most BLS releases, the press release for 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 June, seasonally adjusted new hires totaled 5,348,000, up by 96,000 from the revised 5,252,000 who were hired or rehired in May, as the hiring rate as a percentage of all employed rose to 3.4% in June from 3.3% in May, which matched the 3.4% hiring rate in June a year earlier (details of hiring by industry since January are in table 2)….meanwhile, total separations increased by 91,000, from 5,260,000 in May to 5,351,000 in June, as the separations rate as a percentage of the employed rose from 3.3% in May to 3.4% in June, which was unchanged from the 3.4% separations rate of June a year ago (see table 3)…subtracting the 5,351,000 total separations from the total hires of 5,348,000 would imply a loss of 3,000 jobs in June, in contrast to the revised payroll job increase of 20,000 for June that was reported by the July establishment survey later in the week, but well with the expected +/-110,000 margin of error in these incomplete employment extrapolations…

Breaking down the seasonally adjusted job separations, the BLS finds that 3,232,000 of us voluntarily quit their jobs in June, up by 79,000 from the revised 3,153,000 who quit their jobs in May, while the ‘quits rate’, widely watched as an indicator of worker confidence, remained unchanged at 2.0% of total employment, while it was still down from the 2.1% quits rate of a year earlier (see details in table 4)….in addition to those who quit, 1,766,000 were either laid off, fired or otherwise discharged in June, up by 5,000 from the revised 1,761,000 who were discharged in May, as the discharges rate was unchanged at 1.1% of all those who were employed during the month, which was down from the discharges rate of 1.2% a year earlier (see table 5)…meanwhile, other separations, which includes retirements and deaths, were at 353,000 in June, up from 346,000 in May, for an ‘other separations rate’ of 0.2%, the same as in May and as in June 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 easily accessed using the links to tables at the bottom of the press release…

US Trade Deficit was 5.6% Lower in June on Lower Imports of Drugs and Computers

Our trade deficit decreased by 5.6% in June, after increasing by a revised 42.2% in May, as both the value our exports and our imports decreased, but the value of our imports fell by more than twice as much….the Commerce Department report on our international trade in goods and services for June indicated that our seasonally adjusted goods and services trade deficit fell by a rounded $4.4 billion to $73.3 billion in June, from a revised but barely changed May deficit of $77.6 billion.…the value of our June exports fell by a rounded $2.9 billion to $314.7 billion on a $4.0 billion decrease to $206.9 billion in our exports of goods, which was partly offset by a $1.1 billion increase to $107.8 billion in our exports of services, while the value of our imports fell by a rounded $7.3 billion to $388.0 billion on a $7.9 billion decrease to $309.0 billion in our imports of goods, which was partly offset by a $0.6 billion increase to $79.0 billion in our imports of services…export prices were on average 0.6% lower in June, which means that part of the decrease in the value of our exports was due to lower prices, and hence our real exports fell on the order of 0.3%, while import prices were 0.3% higher, which means the decrease in the value of our imports was 0.3% less than their real decrease, and that our real imports fell by about 2.1% ….

The news release for this month’s report gives us a brief synopsis of Exhibits 7 and 8 in the Full Release and Tables pdf for May, which details the major reasons for the decreases in our exports and our imports: 

Exports of goods on a Census basis decreased $3.8 billion.

• Industrial supplies and materials decreased $3.3 billion.
  • Crude oil decreased $5.7 billion.
  • Fuel oil decreased $1.6 billion.
  • Nonmonetary gold increased $3.4 billion.
• Other goods decreased $0.8 billion.
• Capital goods decreased $0.6 billion.
  • Computers decreased $1.1 billion.

Net balance of payments adjustments decreased $0.2 billion.

Imports of goods on a Census basis decreased $7.7 billion.

• Capital goods decreased $2.1 billion.
  • Computers decreased $3.0 billion.
  • Telecommunications equipment increased $1.1 billion.
• Consumer goods decreased $2.1 billion.
• Pharmaceutical preparations decreased $1.9 billion.

  Net balance of payments adjustments decreased $0.2 billion.

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

The June figures show surpluses, in billions of dollars, with Netherlands ($7.2), South and Central America ($5.6), Hong Kong ($3.2), Switzerland ($2.9), United Kingdom ($2.2), Singapore ($1.8), Saudi Arabia ($1.8), Brazil ($1.7), Australia ($1.3), and Belgium ($0.9). Deficits were recorded, in billions of dollars, with Vietnam ($21.6), Mexico ($20.3), China ($15.3), Taiwan ($14.9), European Union ($10.9), South Korea ($7.4), Canada ($7.2), Germany ($7.1), India ($4.5), Malaysia ($4.4), Japan ($3.3), Ireland ($2.7), Italy ($2.5), France ($1.5), and Israel ($1.2).

• The balance with Switzerland shifted from a deficit of $2.3 billion in May to a surplus of $2.9 billion in June. Exports increased $4.5 billion to $6.5 billion and imports decreased $0.7 billion to $3.5 billion.
• The deficit with Taiwan decreased $4.5 billion to $14.9 billion in June. Exports increased $0.1 billion to $4.6 billion and imports decreased $4.4 billion to $19.5 billion.
• The deficit with South Korea increased $3.0 billion to $7.4 billion in June. Exports decreased $1.4 billion to $6.9 billion and imports increased $1.6 billion to $14.3 billion.

In the advance report on 2nd quarter GDP released last week, our June goods trade was estimated based on the sketchy Advance Report on our International Trade in Goods from the Census Bureau, which was also released that week, coincident with the GDP release…that report estimated that our June goods trade deficit was at $101,461 million on a Census basis, down from the $105,892 million goods deficit then reported for May….Exhibit 5 in this report revises those figures and shows that our actual goods trade deficit in June was at $102,109 million on a balance of payments basis, and $101,407 million on a Census basis, and that the May goods deficit was revised to $105,327 million on a Census basis…together, those revisions from the previously published data mean that the 2nd quarter goods trade deficit in goods was roughly $619 million less than the estimates that were used in the GDP report, or about $2.48 billion less at an annual rate, before adjusting for price changes…that change would indicate an upward revision of roughly 0.04 percentage points to 2nd quarter GDP when the 2nd estimate is released at the end of August…

Construction Spending Fell 0.1% in June, and Sharp Downward Revisions Hit 2nd Quarter GDP

The Census Bureau report on construction spending for June (pdf) estimated that the month’s seasonally adjusted construction spending would work out to $2,166.5 billion annually if extrapolated over an entire year, which was 0.1 percent (±0.8 percent)* below the revised annualized estimate of $2,168.5 billion of construction spending for May, and 3.2 percent (±1.5 percent) below the estimated annualized level of construction spending in June of last year….the May annualized construction spending estimate was revised nearly 1.9% lower, from $2,210.2 billion to $2,168.5 billion, while the annual rate of construction spending for April was revised nearly 1.8% lower, from $2,207.1 billion to $2,168.2 billion…after those revisions, construction spending tor the first half of 2026 amounted to $1,046.9 billion, 3.5 percent (±1.2 percent) less than the $1,084.5 billion spent for construction during the first half of 2025..

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

• Private Construction – Spending on private construction was at a seasonally adjusted annual rate of $1,622.5 billion, 0.1 percent (±0.5 percent)* below the revised May estimate of $1,624.5 billion. Residential construction was at a seasonally adjusted annual rate of $877.1 billion in June, 0.3 percent (±1.3 percent)* below the revised May estimate of $879.9 billion. Nonresidential construction was at a seasonally adjusted annual rate of $745.3 billion in June, 0.1 percent (±0.5 percent)* above the revised May estimate of $744.6 billion.
• Public Construction In June, the estimated seasonally adjusted annual rate of public construction spending was $544.1 billion, virtually unchanged from (±1.6 percent)* the revised May estimate of $544.0 billion. Educational construction was at a seasonally adjusted annual rate of $113.1 billion, virtually unchanged from (±2.5 percent)* the revised May estimate of $113.0 billion. Highway construction was at a seasonally adjusted annual rate of $150.9 billion, 0.1 percent (±4.4 percent)* below the revised May estimate of $151.1 billion.

Construction spending for all three months of the second quarter was lower than what was reported by the BEA in the advance report for 2nd quarter GDP last week.…as we noted above, the annual rate of construction spending for April was revised $38.9 billion lower, and annualized construction spending for May was revised $41.7 billion lower….in reporting 2nd quarter GDP, the Excel file with key source data and assumptions accompanying the GDP report indicated on line 86 that they had estimated that the annualized value of June’s nonresidential construction would be $3.1 billion less than that of the previously reported May figure, that June’s annualized residential construction on line 109 would be $0.9 billion more than that of the previously reported May figure, and that the value of June’s public construction shown on line 200 would be $1.0 billion less than the previously published May figure…hence, the total of the annualized figures used by the BEA for total June construction in the 2nd quarter GDP report were $3.2 billion less than the previously published May figure…with June construction now reported to be down $2.0 billion from a May figure that was revised $41.7 billion lower, that means that the BEA had overestimated annualized June construction spending by $40.5 billion when reporting 2nd quarter GDP…thus, after averaging the revisions to construction spending for the three months of the 2nd quarter, we find the total revised annualized figure for 2nd quarter construction spending would thus be $40.4 billion less in current dollars than the current dollars figures used by the BEA when computing 2nd quarter GDP, implying we’ll see a downward revision of about 0.73 percentage points to the construction components of 2nd quarter GDP when the 2nd estimate is released on the 27th of August, give or take a bit, depending on the mix of inflation adjustments to the revised figures…

Factory Shipments Rose 0.5% in June, Factory Inventories were 0.2% Higher

The Full Report on Manufacturers’ Shipments, Inventories, & Orders (pdf) from the Census Bureau reported that the seasonally adjusted value of new orders for manufactured goods fell by $2.3 billion or 0.3 percent to $656.5 billion in June, following a decrease of 1.1% to $658.8 billion in May, which was revised from the 1.3% decrease to $657.4 billion reported for May last month….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 useful as a revised update to the advance report on durable goods we reported on last week.…on those revisions, the Census Bureau’s own summary, which precedes their detailed spreadsheet of the metrics included in this report, is quite complete, so we’ll just quote directly from that here:

• Summary: New orders for manufactured goods in June, down two consecutive months, decreased $2.3 billion or 0.3 percent to $656.5 billion, the U.S. Census Bureau reported today. This followed a 1.1 percent May decrease. Shipments, down following six consecutive monthly increases, decreased $1.1 billion or 0.2 percent to $652.1 billion. This followed a 1.6 percent May increase. Unfilled orders, up twenty-three of the last twenty-four months, increased $9.6 billion or 0.6 percent to $1,590.6 billion. This followed a 0.7 percent May increase. The unfilled orders-to-shipments ratio was 6.86, down from 6.90 in May. Inventories, up nine consecutive months, increased $0.9 billion or 0.1 percent to $962.9 billion. This followed a 0.2 percent May increase. The inventories-to-shipments ratio was 1.48, up from 1.47 in May.
• New Orders  for manufactured durable goods in June, up three of the last four months, increased $1.6 billion or 0.5 percent to $335.4 billion, up from the previously published 0.3 percent increase. This followed a 4.0 percent May decrease. Computers and electronic products, up nine of the last ten months, led the increase, $1.0 billion or 3.2 percent to $31.1 billion. New orders for manufactured nondurable goods decreased $3.9 billion or 1.2 percent to $321.1 billion.
• Shipments of manufactured durable goods in June, up nine of the last ten months, increased $2.8 billion or 0.8 percent to $331.0 billion, up from the previously published 0.7 percent increase. This followed a 1.1 percent May increase. Computers and electronic products, up nine consecutive months, led the increase, $0.8 billion or 2.5 percent to $34.7 billion. Shipments of manufactured nondurable goods, down following six consecutive monthly increases, decreased $3.9 billion or 1.2 percent to $321.1 billion. This followed a 2.2 percent May increase. Petroleum and coal products, down following five consecutive monthly increases, drove the decrease, $4.5 billion or 6.3 percent to $67.1 billion.
• Unfilled Orders for manufactured durable goods in June, up twenty-three of the last twenty-four months, increased $9.6 billion or 0.6 percent to $1,590.6 billion, unchanged from the previously published increase. This followed a 0.7 percent May increase. Transportation equipment, up ten of the last eleven months, led the increase, $4.0 billion or 0.4 percent to $1,002.4 billion.
• Inventories of manufactured durable goods in June, up nine consecutive months, increased $2.1 billion or 0.3 percent to $602.1 billion, unchanged from the previously published increase. This followed a 0.1 percent May increase. Transportation equipment, up eight of the last nine months, led the increase, $0.8 billion or 0.4 percent to $190.7 billion. Inventories of manufactured nondurable goods, down following four consecutive monthly increases, decreased $1.2 billion or 0.3 percent to $360.9 billion. This followed a 0.4 percent May increase. Petroleum and coal products, down two consecutive months, drove the decrease, $1.7 billion or 3.6 percent to $46.7 billion. By stage of fabrication, June materials and supplies increased 0.3 percent in durable goods and decreased 0.6 percent in nondurable goods. Work in process increased 0.5 percent in durable goods and decreased 1.8 percent in nondurable goods. Finished goods increased 0.2 percent in durable goods and 0.5 percent in nondurable goods.

The BEA’s key source data and assumptions (xls) for the advance estimate of second quarter GDP indicated on line 143 that they had estimated that the value of durable goods inventories would increase $2.0 billion before any inflation adjustment in June, and this report indicates that total durable goods inventories actually increased in value by $2.1 billion; in addition, on line 144 of the BEA’s GDP source data, they estimated that nondurable goods inventories fell by $1.2 billion in June, while this report indicates that nondurable goods inventories did fall by $1.2 billion…hence, this report thus shows that the BEA had underestimated the change in the manufacturing 2nd quarter GDP inventory component by around $0.1 billion before any inflation adjustment, or by around $0.4 billion on an annualized basis, which would suggest that 2nd quarter GDP might have to be revised upwards by 0.01 percentage points to account for what this report shows…

Wholesale Sales Fell 3.0% in June, Wholesale Inventories Rose 0.2%

The June report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at “$794.1 billion, down 3.0 percent (±0.5 percent) from the revised May level, but were up 14.1 percent (±0.7 percent) from the revised June 2025 level”..…the May preliminary estimate was revised to $818.65 billion from the $817.4 billion in sales reported last month, and as a result “the April 2026 to May 2026 percent change was revised from the preliminary estimate of up 3.4 percent (±0.5 percent) to up 3.5 percent (±0.5 percent)”….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 produced or finally sold…

On the other hand, the monthly change in private inventories is a major factor in GDP, as additional goods on the shelf or in intermediate storage represent goods that were produced but not sold, and this June report estimated that wholesale inventories were valued at a seasonally adjusted $944.7 billion at month end, up 0.2 percent (±0.2 percent)* from the revised May level, and 4.2 percent (±1.2 percent) higher than in June a year ago, with the May preliminary estimate revised from the $941.8 billion reported last month to $943.1 billion, now a 0.3% increase from April…

In the advance report on 2nd quarter GDP of last week, wholesale inventories were estimated based on the sketchy Advance Report on Wholesale and Retail Inventories, which was released the day before the GDP release…that report estimated that our seasonally adjusted wholesale inventories were valued at $945,938 million at the end of June, up from $943,367 million in May….those figures total $1,482 million more than the $944,710 million for June and $943,113 million for May that this report shows, which means that the quarterly increase in 2nd quarter wholesale inventories used in the GDP report was overestimated at about a $5.93 billion annual rate…assuming there’s no revision or major imbalance in the inflation adjustment to those inventories, that would suggest that the growth rate of 2nd quarter GDP was overestimated by around 0.09 percentage points, just based on what this wholesale report shows…

(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 chosen from the aforementioned GGO posts, contact me…)

record distillates exports leaves summer supplies at a 30 year low; SPR at new 43 year low, US oil supplies at 42 year low

Strategic Petroleum Reserve is lowest since February 18, 1983; total of all US oil supplies are the lowest since March 30th, 1984….gasoline supplies at a 37 week low; distillates ​exports at all time high leaves distillate inventories at the lowest summertime level in thirty years

US oil prices fell for a second consecutive week, after rising over the three prior weeks, as Iran and Oman appeared to be close to finalizing a bilateral deal to manage​ ship traffic through the Strait of Hormuz, which could allow for the relatively unrestrained flow of Persian Gulf oil to global markets for the first time since Israel and the US started their war on Iran at the end of February…after falling 5.1% to $84.67 a barrel last week after Trump halted attacks on Iran after being advised that the U.S. arsenal of necessary weaponry was nearly depleted, the contract price for the benchmark US light sweet crude for September delivery fell sharply on global markets on Monday as traders reacted to U.S. President Trump’s announcement that a planned military strike against Iran had been delayed and that new negotiations would begin, and gapped lower on the opening in the US, after President Trump said talks with Iran were expected to take place ​t​hat afternoon, and settled $4.33 or more than 5% lower at $89.34 a barrel even after Iran said there were no talks under way with the United States and ​there were no plans for any meetings, contradicting Trump who had cited talks he said would take place that afternoon as ​his justification for calling off attacks…oil prices initially rose on global markets early on Tuesday as a diplomatic resolution to the US-Iran conflict remained uncertain, while disruptions to oil flows through key shipping routes persisted, but then fell as much as 5% to a three-week low after comments by Qatar and US Treasury Secretary ‌Scott Bessent raised hopes for a diplomatic resolution to the Middle East conflict, which would improve oil flows through the Strait of Hormuz, ​and then extended their losses as US markets opened in New York as traders digested headlines suggesting slow but steady progress toward diplomacy in the Middle East, and settled $4.57 or 5.7% lower at $75.77 a barrel on growing outreach by the Trump administration and international negotiators to end the U.S. war with Iran….oil prices rebounded on Asian markets on Wednesday, after Yemen’s Houthi​s attacked a Saudi oil tanker in the Red Sea, reigniting concerns over Middle East supply risks, despite renewed talk of US-Iran negotiations, then steadied as markets opened in New York, as the new threats to security offset diplomatic efforts ​i​n the Middle East, and moved lower on reports that a draft deal to open the Strait of Hormuz was imminent, and settled 55 cents lower at $75.22 a barrel as traders weighed the reports of progress on possibly ending the war with Iran against reports that Yemen’s Iran-aligned Houthi rebels had attacked a Saudi oil tanker in the Red Sea….oil prices remained firm on global markets on Thursday after Iran and Oman announced they were nearing an agreement to allow shipping through the Strait of Hormuz​, following ​their prolonged negotiations that excluded the United States, and were up more than 1% as markets opened in New York on reports that Iran had threatened to strike Gulf states hard unless they could convince the U.S. to end its war on Tehran, and settled $2.07 higher at $77.29 a barrel on news that an Iranian parliament committee was reviewing a bill ‌that would ban U.S. and Israeli vessels from the Strait of Hormuz, and fine violators up to a fifth of the value of their cargo….oil prices extended their gains during Asian trading on Friday, as the renewed uncertainty over shipping through the Strait of Hormuz fueled concerns about global energy supplies, then held steady during morning trading in New York, as traders evaluated reports that Iran and neighboring Gulf states were negotiating a temporary deal to reopen the Strait of Hormuz, and settled 89 cents higher at $78.18 a barrel over ongoing uncertainty about the negotiations in progress that would determine the control of, and reopen, the key shipping artery of the Strait of Hormuz, leaving ​US oil prices 9.2% lower for the week..

meanwhile, natural gas prices finished lower for a sixth straight week on diminishing cooling demand and a larger-than-expected injection of gas into storage….after falling 4.9% to $2.747 per mmBTU last week on record production and on more than adequate inventories, the price of the benchmark natural gas contract for September delivery opened 3.4 cents higher on Monday, supported by short-term forecasts for strong cooling demand, then traded within a narrow band near $2.765 for the balance of the day and settled 3.4 cents higher at $2.781 per mmBTU, as cooler forecast trends and abundant supply extinguished the early momentum for natural gas futures, despite regionally strong demand expected in the two-week window….September natural gas​ then opened 8.4 cents lower on Tuesday, as the ebbing cooling demand was expected to give way to more comfortable temperatures, and settled 9.9 cents lower at $2.682 per mmBTU as cooler forecasts across key eastern demand centers and expectations for another storage build above seasonal norms outweighed improving LNG feedgas demand and a modest decline in daily production…natural gas prices opened slightly higher on Wednesday and traded within a narrow band between $2.660 and $2.695 for rest of the session, on steady LNG demand, waning cooling demand, and positioning ahead of Thursday’s storage report, and settled six-tenth of a cent higher at 2.688 per mmBTU, as modest improvements in daily supply-demand balances supported the front of the curve while traders remained focused on Thursday’s EIA storage report…natural gas prices opened 2 cents lower on Thursday, and fell to an intraday low of $2.616 following ​a bearish injection report, then was little changed into the afternoon to settle 4.8 cents lower at $2.640 per mmBTU after the US EIA reported a slightly larger-than-expected storage injection, reinforcing the market’s view that supplies remain​ed ample​, despite easing production and strengthening LNG feedgas demand…natural gas prices remained weak during early Friday trading, as the market assessed ample supply and a shrinking window for intense cooling demand, then inched higher at midday, as bargain buyers stepped in following ​t​he weeklong slump amid hints of rising LNG demand​, and settled 2.2 cents higher at $2.662 per mmBTU as stronger LNG feedgas and elevated power demand provided support following the previous session’s storage-driven decline, even as a cooler weather outlook and ample inventories continued to temper the market’s upside. leaving natural gas prices 3.1% lower for the week

The EIA’s natural gas storage report for the week ending July 31st indicated that the amount of working natural gas held in underground storage rose by 33 billion cubic feet to 3,117 billion cubic feet by the end of the week, which left our natural gas supplies 12 billion cubic feet, or 0.4% below the 3,129 billion cubic feet of gas that were in storage on July 31st of last year, but 195 billion cubic feet, or 6.7% above the five-year average of 2,922 billion cubic feet of natural gas that had typically been in working storage as of the 31st of July over the most recent five years….the 33 billion cubic foot injection into natural gas storage for the cited week was more than the 27 billion cubic foot injection into storage that the market had been expecting ahead of the report, and it was way more than the 13 billion cubic foot of gas that were injected into natural gas storage during the corresponding week of 2025, and also more than the average 23 billion cubic foot injection into natural gas storage that had been typical for the last week in July over the past five 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 July 31st showed that after a decrease in our refinery throughput and an increase in our oil imports, we still needed to pull a bit of oil out of our stored crude supplies for a record fifteenth consecutive week, and for the 37th time in sixty-two weeks, as a ​sizable withdrawal of oil from the SPR was enough to keep commercial supplies from falling further…. Our imports of crude oil rose by an average of 515,000 barrels per day to average 6,198,000 barrels per day, after falling by an average of 124,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 218,000 barrels per day to average 3,685,000 barrels per day, which, when used to offset our imports, meant that the net of our trade of oil worked out to an import average of 2,513,000 barrels of oil per day during the week ending July 31st, an average of 297,000 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 supplies from Alaskan gas liquids, from natural gasoline, from condensate, and from unfinished oils averaged 3,000 barrels per day less than the prior week at 223,000 barrels per day, while during the same week, production of crude from US wells was 8,000 barrels per day higher at 13,804,000 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 total of 16,540,000 barrels per day during the July 31st reporting week…

Meanwhile, US oil refineries reported they were processing an average of 17,153,000 barrels of crude per day during the week ending July 31st, an average of 183,000 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 net of 52,000 barrels of oil per day were being pulled out of the supplies of oil stored in the US… So, based on all that reported & estimated data, the crude oil figures provided by the EIA appear to indicate that our total working supply of oil from storage, from net imports, from transfers, and from oilfield production during the week ending July 31st averaged a rounded 561,000 fewer barrels per day than what our oil refineries reported they used during the week.  To account for the difference between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a [ +561,000 ] 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 indicating there must have been a error or omission of that amount in the week’s oil supply & demand figures that we have just transcribed…. Moreover, since 468,000 barrels per day of demand for oil supply could not be accounted for in the prior week’s EIA data, that means there was a 1,029,000 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 somehow off by that much, and therefore completely useless…. However, since most oil traders react to to the figures in these weekly EIA reports as if they were gospel, 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 supply, see this EIA explainer….also see this March 2023 twitter thread from an EIA administrator addressing these ongoing weekly errors, and what they had once hoped to do about it).

This week’s net 52,000 barrel per day average decrease in our overall crude oil inventories came as an average of 354,000 barrels per day were being added to our commercially available stocks of crude oil, while 406,000 barrels per day were being pulled out of our Strategic Petroleum Reserve, the nineteenth consecutive Iran war related withdrawal from the SPR, including the four largest draws in SPR history, which left the SPR level at 304,809,000 barrels, the lowest since it was initially being filled in March 1983….with both commercial oil and the SPR both at long term lows, that left the Total of all US Oil Supplies at 711,796,000 barrels, down from 870,774,000 barrels on April 17th, and the lowest since March 30th, 1984….After those recent draws on the SPR and also on commercial supplies, and with total fuel inventories tracking near multi-year lows, our Total Supplies of Crude Oil and Petroleum Products, including the SPR, fell by 811,000 barrels to 1,525,539,000 barrels during the week ending July 24th, after our total supplies had fallen to a 23 year low four weeks earlier….

Further details from the weekly Petroleum Status Report (pdf) indicated that the 4 week average of our oil imports rose to 5,844,000 barrels per day last week, which was 4.4% less than the 6,113,000 barrel per day average that we were importing over the same four-week period last year, while the four week average of our exports rose to 3,557,000 barrels per day last week, which was still 6.3% more than the 3,347,000 barrel per day average that we were exporting last year year at this time… This week’s crude oil production was reported to be 8,000 barrels per day higher at 13,804,000 barrels per day as the EIA’s estimate of the output from wells in the lower 48 states was unchanged at 13,376,000 barrels per day, while Alaska’s oil production was 8,000 barrels per day higher at 428,000 barrels per day…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 was 5.4% higher than that of our pre-pandemic production peak, and was also 42.3% 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 96.5% of their capacity while processing those 17,153,000 barrels of crude per day during the week ending July 31st, down from 97.2% the prior week, but still above the recent normal utilization for this or any time of year….the 17,153,000 barrels of oil per day that were refined that week were 0.2% more than the 17,124,000 barrels of crude that were being processed daily during the week ending August 1st of 2025, but were 3.5% less than the 17,777,000 barrels that were being refined during the pre-pandemic week ending August 2nd, 2019, when our refinery utilization rate was at 96.4%, which was close to the pre-pandemic normal utilization rate for this time of year…

With the decrease in the amount of oil that was being refined this week, gasoline output from our refineries was also lower, decreasing by 309,000 barrels per day to 9,569,000 barrels per day during the week ending July 31st, after our refineries’ gasoline output had increased by 178,000 barrels per day during the prior week… This week’s gasoline production was 2.4% lower than the 9,803,000 barrels of gasoline that were being produced daily over the week ending August 1st of last year, and 8.2% less than the gasoline production of 10,421,000 barrels per day seen during the prepandemic week ending August 2nd, 2019….at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 144,000 barrels per day to 5,230,000 barrels per day, after our distillates output had increased by 15,000 barrels per day during the prior week.  Even with that decrease, our distillates output was 2.4% more than the 5,105,000 barrels of distillates that were being produced daily during the week ending August 1st of 2025, but 1.1% less than the 5286,000 barrels of distillates that were being produced daily during the pre-pandemic week ending August 2nd, 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 20th time in twenty-five weeks, decreasing by 1,643,000 barrels to a thirty-seven week low of 211,301,000 barrels during the week ending July 31st, after our gasoline inventories had increased by 7,000 barrels during the prior week.  Our gasoline supplies fell this week as the amount of gasoline supplied to US users fell by 10,000 barrels per day to  9,031,000 barrels per day, because our imports of gasoline fell by 196,000 barrels per day to 463,000 barrels per day while our exports of gasoline fell by 83,000 barrels per day to 807,000 barrels per day… After fifty-one gasoline inventory withdrawals over the past seventy-six weeks, our gasoline supplies were 7.7% lower than last August 1st’s gasoline inventories of 227,082,000 barrels, and about 7% below the five year average of our gasoline supplies for this time of year…

After this week’s decrease in distillates production, our supplies of distillates fell for the eleventh time in twenty-six weeks, decreasing by 3,473,000 barrels to 107,159,000 barrels during the week ending July 31st, the lowest summertime level in thirty years, after our distillates supplies had increased by 1,062,000 barrels during the prior week… Our distillates supplies fell this week because the amount of distillates supplied to US markets, an indicator of domestic demand, rose by 417,000 barrels per day to 3,941,000 barrels per day, and because our exports of distillates rose by 98,000 barrels per day to a record high of 1,884,000 barrels per day, while our imports of distillates rose by 1,000 barrels per day to 99,000 barrels per day… After 26 withdrawals from distillates inventories over the past 57 weeks, our distillates supplies at the end of the week were 5.1% lower than the 112,971,000 barrels of distillates that we had in storage on August 1st of 2025, and were about 12% below the five year average of our distillates inventories for this time of the year…

Finally, after the increase in our oil imports and the decrease in our oil refining, and after the big withdrawal from the SPR, our commercial supplies of crude oil in storage rose for the 13th time in twenty-six weeks, and for the 25th time over the past year, increasing by 2,479,000 barrels over the week, from 404,508,000 barrels on July 24th to 406,987,000 barrels on July 31st, after our commercial crude supplies had decreased by 7,167,000 barrels to a 94 month low over the prior week….After this week’s increase, our commercial crude oil inventories were still about 6% below the recent five-year average of commercial oil supplies for this time of year, while they were still about 16% above the average of our available crude oil stocks as of the end of July over the 5 years at the beginning of the past decade, with the 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 in the Spring of 2020, then jumped again after February 2021’s winter storm Uri froze off US Gulf Coast refining, but then fell sharply due to increased exports to Europe following the onset of the Ukraine war, only to jump again following the Christmas 2022 refinery freeze-offs, changes in our commercial crude supplies had been less extreme up until the onset of the Iran war, when they were initially built up to a three year high by mid-April…However, after falling sharply over the past three months, our commercial crude oil inventories as of this July 31st were 3.9% below the 423,662,000 barrels of oil we had in commercial storage on August 1st of 2025, and were 5.2% less than the 429,321,000 barrels of oil that we had in storage on August 2nd of 2024, and 8.7% less than the 445,622,000 barrels of oil we had left in commercial storage on August 4th of 2023…

This Week’s Rig Count

The US rig count was unchanged over the week ending August 7th, as the number of rigs targeting oil was up by three, the count of rigs targeting natural gas was down by three, and miscellaneous rigs were unchanged…for a quick snapshot of this week’s rig count, we are again including below a screenshot of the rig count summary table from Baker Hughes…in the table below, the first column shows the active rig count as of August 7th, the second column shows the change in the number of working rigs between last week’s count (July 31st) and this week’s (August 7th) count, the third column shows last week’s July 31st active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday of the same week 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 Friday, the 8th of August, 2025…

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2nd quarter GDP; June’s income and outlays, and durable goods

The key economic releases from last week were the 1st, or advance estimate of 2nd quarter GDP and the June report on Personal Income and Spending, and a June report that included metrics which were later included in the week’s release of 2nd quarter GDP: the June advance report on durable goods….this week also saw the release of the S&P CoreLogic Case-Shiller home price indexes for May from S&P Global, which is based on a 3-month average of March, April and May home repeat sales closing prices, and which reported that their national home price index was 1.1% higher than their home price index over the same three months of a year ago, up from the 0.9% annual increase they reported for April, but down from the 2.3% annual increase they reported a year ago….

This week also saw the release of the last two regional Fed manufacturing survey for July: the Dallas Fed’s Texas Manufacturing Outlook Survey, which also covers adjacent western Louisiana and southeastern New Mexico, indicated its general business activity index rose to +1.3 in July from +0.0 in June, indicating a small plurality of Texas businesses are now experiencing improvement, after two months wherein those reporting improvement virtually matched those reporting a slowdown, and 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 rose to +5 in July, up from a reading of +4 in June and from +3 in May, indicating that a slightly larger plurality of that region’s manufacturers reported improving business metrics in July than did in those prior months..

2nd Quarter GDP Grew at 1.5% Rate on Higher Personal Consumption and Fixed Investment

Our economy grew at a 1.5% rate in the 2nd quarter, a bit slower than the 2.1% growth recorded in the first quarter, as growth in personal consumption of goods and services, fixed investment, and exports were partly offset by a contraction of inventories, lower government consumption expenditures, and a large increase in imports, which subtracts from other GDP components… the Advance Estimate of 2nd Quarter GDP from the Bureau of Economic Analysis estimated that the real output of goods and services produced in the US grew at a 1.5% annual rate over the output of the 1st quarter of this year, when our real output grew at a 2.3% rate… In current dollars, our second quarter GDP grew at a 7.87% annual rate, increasing from what would work out to be a $31,865.7 billion a year rate in the 1st quarter to a $32,475.2 billion annual rate in the 2nd quarter, with the headline 1.5% annualized rate of increase in real output arrived at after annualized GDP inflation adjustments averaging 5.7% were computed from the price changes of the GDP components and applied to their current dollar change..

As is usual with an advance estimate, the source data used to compute GDP is incomplete and also subject to revisions, which have averaged +/-0.6% in either direction before the third estimate for the quarter is released, which will be two months from now….note that June construction, June trade in services, and non-durables inventory data have yet to be reported or estimated by the agencies responsible for that data, and that the BEA assumed a $2.2 billion increase in exports of services, a $7.7 billion increase in imports of services, a $0.9 billion increase in residential construction, a $3.1 billion decrease in non-residential construction, a $1.0 billion decrease in public construction, and a $1.2 billion decrease in nondurable factory inventories for June before they estimated our 2nd quarter output (see the Key source data and assumptions excel file that accompanies this report for more specific details)..

While we cover the details on the 2nd quarter below, remember that the GDP news release reports all quarter over quarter percentage changes at an annual rate, which means that they’re expressed as a change roughly four times of that which 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 indexes chained from 2017 prices, and then that all percentage changes in this report are calculated from those ‘2017 dollar’ figures, which would be better thought of as quantity indexes than as any reality based dollar amounts, because the change in real GDP is not the change in a monetary metric…for our purposes, all the data that we’ll use in reporting the changes here comes directly from National Income and Product Accounts Data Tables…

Personal consumption expenditures (PCE), which accounts for roughly 68% of GDP, grew at a 8.45% rate in current dollars in the 2nd quarter, up from the first quarter’s personal consumer spending nominal increase at a revised 5.18% rate, but after inflation adjustments were made with PCE price indices increases of 4.6% for the first quarter and 5.1% for the 2nd quarter, real PCE rose at a 3.2% rate in the 2nd quarter after rising at a 0.5% rate in the first…nominal consumer spending for durable goods rose at a 12.2% rate, but since the weighted prices for those durable goods rose at a 5.0% rate, the real output of durable goods represented by that spending increased at a 6.8% rate, as a real increase in the implied output of motor vehicles and parts at a 10.5% rate accounted for almost half of the increase in durable goods .…at the same time, current dollar consumer spending for non-durable goods was 15.0% higher, while the PCE price index for non-durable goods rose by 10.1%, which meant that real growth in consumption of non durable goods was at a 4.4% rate, as greater consumption implied output of groceries, clothing and prescription drugs was offset by a real drop in consumption of gasoline…. similarly, the 6.04% current dollar growth rate in personal spending for services was deflated by a rounded 3.7% PCE services price index increase to show the 2nd quarter’s real growth in services was at a 2.2% rate, as growth in food services and accommodations accounted for about 30% of the quarter’s growth of services….thus, with decent real growth in all the components of personal consumption expenditures, our increased output of consumer durable goods added 0.49 percentage points to the change in GDP, real growth in non-durable goods output for consumers added 0.60 percentage points to 2nd quarter GDP growth, and real growth in services provided to consumers added 1.04 percentage points to the growth rate of 2nd quarter GDP…

Just as personal consumption expenditures are adjusted for inflation using the PCE price indices to arrive at real PCE, the other current dollar components of GDP are also adjusted for inflation with the price indexes shown in Table 1.6.7 of our National Income and Product Accounts to yield the real change in the output of goods or services…..hence, real gross private domestic investment, which had grown at a 7.9% annual rate in the 1st quarter as both fixed investment and inventories grew, grew at a 3.0% annual rate in the 2nd quarter, as fixed investment grew but inventory growth shrunk….real fixed investment grew at a 7.0% rate in the second quarter after growing at a 6.5% rate in the first quarter, as real nonresidential fixed investment grew at a 8.4% annual rate, down from the 10.6% growth rate reported for the first quarter, as real investment in non-residential structures shrunk at a 5.0% rate, down slightly from the first quarter’s real contraction rate of 4.7%, while real investment in equipment grew at a 15.2% rate, also down slightly from the first quarter’s 15.8% real growth, and as investment in intellectual property grew at 8.8% rate, down from the first quarter’s 13.9% growth rate….after those changes, our lower real investment in non-residential structures subtracted 0.14 percentage points from GDP, while greater real investment in equipment added 0.80 percentage points to the growth of GDP, and investment in intellectual property added 0.48 percentage points to GDP….at the same time, real residential investment grew at a 1.5% rate, after shrinking at a 7.8% rate in the first quarter, and added 0.05 percentage points to the 2nd quarter’s GDP, bringing the total fixed investment contribution to GDP to a rounded 1.20 percentage points…for an easy to read table as to what’s included in each of those investment categories, see the NIPA Handbook, Chapter 6, page 3…

Meanwhile, a decrease in private inventories in the 2nd quarter lowered gross investment and hence GDP, as real private inventories shrunk by an inflation adjusted $89.5 billion in the 2nd quarter, after shrinking at an inflation adjusted $28.1 billion in the first quarter, and as a result the $61.4 billion decrease in real inventory growth subtracted 0.67 percentage points from the 2nd quarter’s growth rate, after an inflation adjusted $18.1 billion positive change in inventory growth in the 1st quarter had added 0.23 percentage points to that quarter’s GDP growth rate….however, shrinking inventories indicate that less of the goods produced during the quarter were left sitting on a shelf or in storage, so their quarter over quarter decrease at a $61.4 billion rate meant that real final sales of GDP were actually greater by that amount, and hence real final sales of GDP grew at a 2.2% rate in the 2nd quarter, after real final sales had increased at a 1.9% rate in the 1st quarter, when the $18.1 billion increase in inventory growth meant that real final sales of GDP were that much lower…

Real exports and real imports both increased in the 2nd quarter, but our imports grew by three times as much, thus sharply reducing 2nd quarter GDP.   Our real exports of goods and services grew at a 4.5% rate in the second quarter, after growing at a 10.9% rate in the 1st quarter, while our real imports grew at an 11.5% rate in the 2nd quarter, after growing at a 11.8% rate in the 1st quarter. As you might recall, exports are added to GDP because they are part of our production that was not consumed or added to investment in our country (& hence not counted in the GDP computation elsewhere), while increases in imports subtract 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.  Thus the 2nd quarter increase in real exports added 0.50 percentage points to 2nd quarter GDP, after the first quarter increase had added 1.12 percentage points to first quarter GDP.  On the other hand, since imports subtract from GDP, their increase at an 11.5% rate subtracted 1.51 percentage points from second quarter GDP, after the first quarter import increase had subtracted 1.49 percentage points from that quarter’s growth. As a result, our our deteriorating trade imbalance subtracted a net of 1.01 percentage points from 2nd quarter GDP, after our weakening trade deficit had subtracted 0.37 percentage points from our GDP in the first quarter…

Finally, real consumption and investment by all branches of government decreased at an 0.8% annual rate in the 2nd quarter, after increasing at a 4.4% annual rate in the 1st quarter, as federal government consumption and investment shrunk at a 4.1% rate, after growing at a 9.4% rate in the fist quarter, while state and local consumption and investment grew at a 1.1% rate, after growing at a 1.6% rate in the first quarter. Inflation adjusted federal spending for defense grew at a 2.4% rate and added 0.09 percentage points to 1st quarter GDP growth, while real non-defense federal consumption and investment shrunk at a 12.9% rate and subtracted 0.34 percentage points from GDP….note that federal government outlays for social insurance are not included in this GDP component; rather, they are included within personal consumption expenditures only when such funds are spent on goods or services, presumably indicating an increase in the output of goods or services….Meanwhile, state and local government investment and consumption expenditures grew at a 1.1% annual rate and added 012 percentage points to the growth rate of 2nd quarter GDP, as a real decrease in state and local investment at an 5.8% annual rate reduced state and local growth and subtracted 0.04 percentage points from GDP…

June Personal Income Up 0.2%, Personal Spending Up 0.3%; PCE Price Index Down 0.1%, Savings Rate at 2.7%, a 4 Year Low

The data in this week’s release of the June Income and Outlays report from the Bureau of Economic Analysis was concurrent with their GDP release on Thursday, and all the PCE data in the second quarter GDP report we just reviewed actually originated from the data computed and reported here…and like that GDP report, all the dollar values in this report are seasonally adjusted and at an annual rate, ie, they tell us what personal income, spending and saving would be for a year if June’s adjusted income and spending were extrapolated over an entire year…however, the percentage changes are computed monthly, from one annualized figure to the next, and in this case of this month’s report they give us the percentage change in each annualized metric from May to June….

thus, when the opening phrase of the press release for this report tell us “Personal income increased $54.9 billion (0.2 percent at a monthly rate) in June“, it means that the annualized figure for all types of personal income in June, $26,994.0 billion, was $54.9 billion, or roughly 0.2% more than the annualized personal income figure of $26,939.1 billion for May; the actual increase in US personal income from May to June is not given….similarly, disposable personal income, which is income after taxes, also rose by roughly 0.2%, from an annual rate of $23,674.3 billion in May to an annual rate of $23,722.6 billion in June…the monthly contributors to the change in personal income, which can be viewed in Table 2.6. of the National Income and Product Accounts for this release, are also annualized….the major contributors to the $54.9 billion annualized increase in personal income in June were a $27.9 billion annual rate of increase in interest and dividend income, a $26.8 billion annual increase in government social benefits to persons, and a $24.8 billion annualized increase in income from wages and salaries, while farm proprietor’s income fell at a $55.7 billion annual rate…

At the same time, seasonally adjusted personal consumption expenditures (PCE) for June, which were included in the change in real PCE in the 2nd quarter GDP report, rose at a $65.2 billion annual rate to an annual rate of $22,184.1 billion in consumer spending, an increase of almost 0.3% from May’s PCE, which itself was revised from the previously reported annual rate of $22,059.8 billion to an annual rate of $22,118.9 billion….total personal outlays for June, which includes interest payments and personal transfer payments in addition to PCE, rose by an annualized $70.0 billion to $23,076.5 billion, which left personal savings, which is disposable personal income less total outlays, at a $646.1 billion annual rate in June, down from the revised $667.8 billion in annualized personal savings in May…as a result, the personal saving rate, which is personal savings as a percentage of disposable personal income, fell from 2.8% in May to 2.7% in June, which was the lowest in four years…

While our personal consumption expenditures accounted for 68.0% of our nominal second quarter GDP, before those expenditures could be included in the national measurement of the change in our output, they were 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 generating a price index for personal consumption expenditures, which is included in this report, which is a chained price index based on 2017 prices = 100….from NIPA Table 2.8.4 for this report, we find that the PCE index fell from 131.535 in May to 131.392 in June, giving us a month over month inflation rate of -0.1087163%, which BEA reports as a decrease of 0.1%, even as the full decimal fraction is used in all their computations….at the same time, NIPA Table 2.8.11 gives us a rounded year over year PCE price index increase of 3.7% in June, down from 4.1% in May, and a core PCE price index increase, excluding food and energy, of 3.3% for the past year, both still above the Fed’s inflation target….applying the June inflation adjustment to the change in June PCE shows that real PCE was up 0.403926% in June, which the BEA reports as a 0.4% increase in their rounded tables…note that when those PCE price indexes are applied to a given month’s annualized current dollar PCE, it yields that month’s annualized real PCE in chained 2017 dollars, which aren’t really dollar amounts at all, but merely the means that the BEA uses to compare one month’s or one quarter’s real goods and services produced to another’s….those results are shown in NIPA Table 2.8.6., where the monthly figures given are the source of the quarterly figures shown in NIPA Table 1.1.6 from the GDP report, and which were thus used to compute the contribution of the 2nd quarter’s real personal consumption of goods and services to GDP…..

June’s Durable Goods: New Orders Rose 0.3%, Shipments Rose 0.7%, Inventories Rose 0.3%

The Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for June (pdf) from the Census Bureau reported that the value of the widely watched new orders for manufactured durable goods increased by $1.1 billion or 0.3 percent to $334.8 billion in June, the third increase in four months, following a decrease of 4.0% to $333.7 billion in May’s new orders, which was revised from the 4.5% decrease to $332.1 billion shown in last month’s report.…despite that big May decrease, year to date new orders are now 6.7% higher than those of 2025, up from the 6.2% year to date increase reported last month..

A $0.9 billion or 3.1 percent increase to $31.1 billion in new orders for computers and electronic products drove June’s headline increase, while the volatile new orders for transportation equipment fell $229 million or 0.2 percent to $113.8 billion, on a 0.6% decrease to $72,967 million in new orders for motor vehicles and parts, which are still 10.4% higher than a year ago….excluding new orders for transportation equipment, other new orders were up 0.6% in June, and excluding new orders for defense equipment, other orders were up 0.3%….meanwhile, new orders for nondefense capital goods excluding aircraft, a proxy for future equipment investment, were up 0.9% to $85,089 million, after rising 1.9% in May…

The seasonally adjusted value of June’s shipments of durable goods, which were inputs into various components of 2nd quarter GDP after their nominal value was adjusted for price changes, increased by $2.4 billion or 0.7 percent to $330.7 billion, after the value of May shipments increased 1.1% to $328,239 million, revised from the 1.0% increase to $327.9 billion that was reported last month….shipments of computers and electronic products led the June increase, rising $0.8 billion or 2.4 percent to $34.7 billion, while shipments of transportation equipment were 0.2% higher, on a 4.0% increase in shipments of defense aircraft and parts…meanwhile, the value of shipments of nondefense capital goods excluding aircraft rose $1,544 million or 1.9% to $82,985 million, after rising a revised 0.2% in May, changes which were reflected in the 2nd quarter GDP equipment investment figures released later in the week…

At the same time, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, rose for the ninth consecutive month, increasing by $2.0 billion or 0.3 percent to $602.0 billion, after the value of May’s inventories was revised but statistically unchanged from the $600.0 billion reported a month ago….increased inventories of transportation equipment led the June increase, rising $0.6 billion or 0.3 percent to $190.6 billion, mostly on a 0.5% increase in the value of inventories of nondefense aircraft and parts, while the value of inventories other than those of transportation equipment also rose 0.3% to $411.4 billion….

Finally, the value of unfilled orders for manufactured durable goods, which is probably a better measure of industry conditions than the widely watched but volatile new orders, rose for the twenty-third time in twenty-four months, increasing by $9.3 billion or 0.6 percent to $1,590.1 billion, following a 0.7% increase to $1,580,853 million in May, which was revised from the 0.6% increase to $1,579.5 billion reported last month… a $4.1 billion or 0.4 percent increase to $1,002.4 billion in unfilled orders for transportation equipment underpinned the June increase, while the value of unfilled orders excluding transportation equipment increased 0.9% to $558,122 million….compared to a year earlier, the unfilled order book for durable goods is now 8.2% above the level of last June, with unfilled orders for transportation equipment 10.0% higher than their year ago level, reflecting a 10.3% year over year increase in the backlog of orders for commercial aircraft and a 14.5% year over year increase in the backlog of orders for defense aircraft….

(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 chosen from the aforementioned GGO posts, contact me…)

US refinery utilization at 8 year high; commercial oil stocks at 8 year low, SPR at 43 year low, total oil supplies at 42 year low

US refinery utilization rate is the highest since September 2018; commercial supplies of crude oil are the lowest since September 2018; the Strategic Petroleum Reserve is at the lowest level since March 1983; total of all US oil supplies are the lowest since March 1984

US oil prices fell for the first time in four weeks after Trump halted attacks on Iran after being advised that the U.S. arsenal of necessary weaponry was nearly depleted…after rising 9.2% to $89.31 a barrel last week after Yemen’s ‘Houthis’ announced they were closing the Bab al-Mandeb Strait to Saudi shipping and attacked two Saudi oil tankers in the Red Sea, leading other tankers to turn back, the contract price for the benchmark US light sweet crude for September delivery plunged over 8% on Australian and Asian markets early Monday, as a weekend pause in hostilities between the United States and Iran raised hopes for a diplomatic breakthrough that could restore normal shipping traffic through the Strait of Hormuz, and was still down by 7% in London at midday, continuing to react to Iran and America pausing their tit-for-tat attacks following a fortnight of steadily escalating violence, and was similarly down more than 6% Monday morning in New York after Iran announced that it would not carry out any further strikes for as long as the U.S. holds its fire, and settled $6.70 or 7.5% lower at $82.61 a barrel, even after Saudi Arabia, Jordan and Iraq reported drone attacks, and after Iran’s Houthis said they targeted the East-West Pipeline carrying oil to Saudi Arabia’s main Red Sea port of Yanbu….oil prices continued to trend lower in early Asian trading on Tuesday, as a fourth night passed without any attacks from either Iran or the United States, and eventually dropped 5% to a two week low on cautious hopes for a resolution to the Iran war, as traders assessed developments in the Middle East, and continued to ease in US trading on revived peace talk optimism as the pause in fighting between the U.S. and Iran entered its fourth day, and ended the session $3.35 or 4% lower at $79.26 a barrel on hopes for a resolution to the U.S.-Iran war….however, oil prices climbed 5% on global markets on Wednesday, following a report from the U.S. military that it had intercepted an Iranian “surprise attack” on its forces, and responded with strikes against the Islamic Republic, and were later up by around seven per cent as the US-Iran war continued to rage on after President Trump pledged to hit back at Iran amid ongoing conflict in the Middle East, then jumped more than 6% Wednesday morning in New York after U.S. and Saudi Arabian forces launched strikes on Iran-aligned militias in Iraq, who allegedly had attacked Saudi oil infrastructure, and held that spike after the EIA reported a big draw on the SPR and commercial oil supplies, with Cushing stocks stuck at ‘Tank Bottoms’, and settled $5.20 or 6.6% higher at $84.46 a barrel as airstrikes resumed in the Middle East, adding to worries ‌about dwindling supplies, as U.S. government data showed domestic crude inventories fell to a multi-year low…oil prices climbed sharply across global markets on Thursday as escalating military tensions in the Middle East heightened concerns over potential disruptions to energy supplies, while traders also weighed the possibility that diplomatic efforts could eventually ease the conflict and restore stability to one of the world’s most important oil shipping routes, then moved lower as Iran and Oman exchanged proposals for an agreement on the management of the Strait of Hormuz, then held steady in early New York trading as an escalating and widening conflict in the Middle East supported prices, which settled 87 cents lower at $83.59 a barrel, as traders digested proposed plans for a Saudi Arabia-led maritime coalition to boost defense cooperation around the Red Sea….oil prices edged lower on Friday as markets assessed the impact of renewed US-Iran military tensions against reports that oil shipments through key maritime routes were continuing, then climbed sharply after Iranian state media reported that the country had attacked two oil tankers transiting the Strait of Hormuz, raising fresh concerns over the security of one of the world’s most critical energy shipping lanes. and settled $1.13 higher at $84.72 a barrel as concerns over global crude flows mounted on Iranian reports that some tankers were forced to turn ‌back in the Strait of Hormuz, thus finishing July trading more than 20% higher, but still ending 5.1% lower for the week…

meanwhile, natural gas prices finished lower for a fifth straight week despite a ​h​otter forecast, on record production and more than adequate inventories…after falling 1.4% to $2.871 per mmBTU last week on cooler forecasts, strong production, weak LNG demand, and plenty of gas in storage, the price of the benchmark natural gas contract for August delivery opened 9.7 cents lower on Monday, and traded along either side of $2.775 through midday, as the situation with Iran and strong production over-shadowed cooling demand, and settled 10.4 cents lower at $2.767 per mmBTU on record output, lower flows to LNG export plants, and ample amounts of gas in storage…natural gas prices opened 4.3 cents lower on Tuesday and again​continued to trend lower, as market fundamentals remained bearish and the August contract expiration weighed in, and settled 10.5 cents lower at $2.662 per mmBTU as traders continued unwinding the August contract ahead of Wednesday’s expiration, as softer near-term demand expectations and resilient supply outweighed forecasts for hotter weather in early August…the August contract opened 1.9 cents lower on its last day of trading Wednesday, then traded cautiously higher throughout the session amid new forecasts for short-term cooling demand to return, and expired 6.3 cents higher at $2.725 per mmBTU, while the more actively traded benchmark natural gas contract for September delivery settled 2.1 cents higher at $2.722 per mmBTU…with markets now citing that September natural gas contact as the front month, prices opened 2.5 cents lower on Thursday, but quickly erased the overnight losses to jump 4.5 cents following the bullish injection report, and settled 3.6 cents higher at $2.758 per mmBTU after the US Energy Information Administration reported a smaller-than-expected storage injection, even as traders remained cautious amid comfortable inventories and robust production…natural gas futures probed modestly higher in early Friday trading as the market assessed Thursday’s bullish storage data and impressive heat forecast throughout much of the next two weeks, then seesawed into late morning trading as traders juxtaposed a lean storage print and forecasts for solid weather demand against elevated levels of total supply, and settled 1.1 cents lower at $2.747 per mmBTU as traders looked beyond Thursday’s smaller-than-expected US Energy Information Administration (EIA) storage injection, refocusing on elevated production, softer LNG export demand and a mixed weather outlook….natural gas prices thus finished 4.3% lower on the week, while the benchmark natural gas contract for September delivery, which had finished the prior week at $2.888, ended 4.9% lower

The EIA’s natural gas storage report for the week ending July 24th indicated that the amount of working natural gas held in underground storage rose by 28 billion cubic feet to 3,084 billion cubic feet by the end of the week, which left our natural gas supplies 32 billion cubic feet, or 1.0% below the 3,116 billion cubic feet of gas that were in storage on July 24th of last year, but 185 billion cubic feet, or 6.4% above the five-year average of 2,899 billion cubic feet of natural gas that had typically been in working storage as of the 24th of July over the most recent five years….the 28 billion cubic foot injection into natural gas storage for the cited week was less than the 35 billion cubic foot injection into storage that the market had been expecting ahead of the report, and it was less than the 44 billion cubic foot of gas that were injected into natural gas storage during the corresponding week of 2025, but was a bit more than the average 26 billion cubic foot injection into natural gas storage that had been typical for the same late July week over the past five 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 July 24th showed that after increases in our refinery throughput and in our oil exports, we needed to pull oil out of our stored crude supplies for a record fourteenth consecutive week, and for the 36th time in sixty-one weeks,. a​s an increase in demand ​for oil that the EIA could not account for also lowered supplies…. Our imports of crude oil fell by an average of 124,000 barrels per day to average 5,683,000 barrels per day, after rising by an average of 117,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 114,000 barrels per day to average 3,467,000 barrels per day, which, when used to offset our imports, meant that the net of our trade of oil worked out to an import average of 2,216,000 barrels of oil per day during the week ending July 24th, an average of 238,000 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 supplies from Alaskan gas liquids, from natural gasoline, from condensate, and from unfinished oils averaged 2,000 barrels per day less than the prior week at 226,000 barrels per day, while during the same week, production of crude from US wells was 2,000 barrels per day lower at 13,796,000 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 total of 16,238,000 barrels per day during the July 24th reporting week…

Meanwhile, US oil refineries reported they were processing an average of 17,336,000 barrels of crude per day during the week ending July 24th, an average of 271,000 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 1,566,000 barrels of oil per day were being pulled out of the supplies of oil stored in the US… So, based on all that reported & estimated data, the crude oil figures provided by the EIA appear to indicate that our total working supply of oil from storage, from net imports, from transfers, and from oilfield production during the week ending July 24th averaged a rounded 468,000 more barrels per day than what our oil refineries reported they used during the week.  To account for the difference between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a [ -468,000 ] 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 indicating there must have been a error or omission of that amount in the week’s oil supply & demand figures that we have just transcribed…. Moreover, since 150,000 barrels per day of oil supply could not be accounted for in the prior week’s EIA data, that means there was a 618,000 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 somehow off by that much, and therefore pretty useless…. However, since most oil traders react to to the figures in these weekly EIA reports as if they were gospel, 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 supply, see this EIA explainer….also see this March 2023 twitter thread from an EIA administrator addressing these ongoing weekly errors, and what they had once hoped to do about it).

This week’s 1,566,000 barrel per day average decrease in our overall crude oil inventories came as an average of 1,024,000 barrels per day were being pulled out of our commercially available stocks of crude oil, leaving them at a 94 month low, while 542,000 barrels per day were being pulled out of our Strategic Petroleum Reserve, the eighteenth consecutive Iran war related withdrawal from the SPR, including the four largest draws in SPR history, which left the SPR level at 307,650,000 barrels, the lowest since it was initially being filled in March 1983​….with both commercial oil and the SPR both at long term lows, that left the Total of all US Oil Supplies at 712,158​,000 barrels, down from 870,774​,000 barrels on April 17th, and the lowest since March 30th, 1984….After those recent draws on the SPR and on commercial supplies, and with total fuel inventories tracking near multi-year lows, our Total Supplies of Crude Oil and Petroleum Products, including the SPR, fell by 7,500,000 barrels to 1,526,350,000 barrels during the week ending July 24th, after oour total supplies had fallen to a 23 year low three weeks earlier….

Further details from the weekly Petroleum Status Report (pdf) indicated that the 4 week average of our oil imports rose to 5,702,000 barrels per day last week, which was 6.9 less than the 6,126,000 barrel per day average that we were importing over the same four-week period last year, while the four week average of our exports fell to 3,451,000 barrels per day last week, which was still 7.6% more than the 3,207,000 barrel per day average that we were exporting last year year at this time… This week’s crude oil production was reported to be 2,000 barrels per day lower at 13,796,000 barrels per day as the EIA’s estimate of the output from wells in the lower 48 states was unchanged at 13,376,000 barrels per day, while Alaska’s oil production was 2,000 barrels per day lower at 420,000 barrels per day…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 was 5.3% higher than that of our pre-pandemic production peak, and was also 42.2% 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 97.2% of their capacity while processing those 17,336,000 barrels of crude per day during the week ending July 24th, up from 96.1% the prior week, and the highest refinery utilization rate since September 2018….the 17,336,000 barrels of oil per day that were refined that week were 2.5% more than the 16,911,000 barrels of crude that were being processed daily during the week ending July 25th of 2025, and were also, coincidentally, 2.5% more than the 16,991,000 barrels that were being refined during the pre-pandemic week ending July 26th, 2019, when our refinery utilization rate was at 93.0%, which was a bit below the pre-pandemic normal utilization rate for this time of year…

With the increase in the amount of oil that was being refined this week, gasoline output from our refineries was also higher, increasing by 178,000 barrels per day to 9,878,000 barrels per day during the week ending July 24th, after our refineries’ gasoline output had increased by 60,000 barrels per day during the prior week… This week’s gasoline production was 1.6% lower than the 10,042,000 barrels of gasoline that were being produced daily over the week ending July 25th of last year, and 5.2% less than the gasoline production of 10,416,000 barrels per day seen during the prepandemic week ending July 26th, 2019….at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 15,000 barrels per day to  5,364,000 barrels per day, after our distillates output had increased by 90,000 barrels per day during the prior week.  With those increases, our distillates output was 3.0% more than the 5,209,000 barrels of distillates that were being produced daily during the week ending July 25th of 2025, and 3.9% more than the 5,164,000 barrels of distillates that were being produced daily during the pre-pandemic week ending July 26th, 2019….

With this week’s increase in our gasoline production, our supplies of gasoline in storage at the end of the week rose for the 5th time in twenty-four weeks, but only by 7,000 barrels to 211,301,000 barrels during the week ending July 24th, after our gasoline inventories had increased by 765,000 barrels during the prior week.  Our gasoline supplies increased by less this week because the amount of gasoline supplied to US users rose by 94,000 barrels per day to  9,041,000 barrels per day, and because our exports of gasoline rose by 83,000 barrels per day to 890,000 barrels per day, while our imports of gasoline rose by 165,000 barrels per day to 659,000 barrels per day … But after fifty gasoline inventory withdrawals over the past seventy-five weeks, our gasoline supplies were 7.5% lower than last July 25th’s gasoline inventories of 228,405,000 barrels, and about 7% below the five year average of our gasoline supplies for this time of year…

After this week’s increase in distillates production, our supplies of distillates rose for the sixteenth time in twenty-six weeks, increasing by 1,062,000 barrels to 110,632,000 barrels during the week ending July 24th, after our distillates supplies had increased by 1,395,000 barrels during the prior week… Our distillates supplies rose again this week because the amount of distillates supplied to US markets, an indicator of domestic demand, fell by 194,000 to 3,524,000 barrels per day, and even though our exports of distillates rose by 182,000 barrels per day to 1,786,000 barrels per day, while our imports of distillates fell by 75,000 barrels per day to 98,000 barrels per day… After 31 additions to distillates inventories over the past 56 weeks, our distillates supplies at the end of the week were 2.6% lower than the 113,536,000 barrels of distillates that we had in storage on July 25th of 2025, and they were still about 10% below the five year average of our distillates inventories for this time of the year…

Finally, after the increases in our oil exports and in our oil refining, our commercial supplies of crude oil in storage fell for the 14th time in twenty-six weeks, and for the 26th time over the past year, decreasing by 7,167,000 barrels over the week, from 411,675,000 barrels on July 17th to a 94 month low of 404,508,000 barrels on July 24th, after our commercial crude supplies had increased by 1,692,000  barrels over the prior week….After this week’s decrease, our commercial crude oil inventories were still about 6% below the recent five-year average of commercial oil supplies for this time of year, while they were about 16% above the average of our available crude oil stocks as of the fourth weekend of July over the 5 years at the beginning of the past decade, with the 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 in the Spring of 2020, then jumped again after February 2021’s winter storm Uri froze off US Gulf Coast refining, but then fell sharply due to increased exports to Europe following the onset of the Ukraine war, only to jump again following the Christmas 2022 refinery freeze-offs, changes in our commercial crude supplies had been less extreme up until the onset of the Iran war, when they were initially built up to a three year high by mid-April…However, after falling sharply over the past three months, our commercial crude oil inventories as of this July 24th were 5.2% below the 426,691,000 barrels of oil we had in commercial storage on July 25th of 2025, and were 6.6% less than the 433,049,000 barrels of oil that we had in storage on July 26th of 2024, and 8.0% less than the 439,771,000 barrels of oil we had left in commercial storage on July 28th of 2023…

This Week’s Rig Count

The US rig count was up by one over the week ending July 31st, as the number of rigs targeting oil was up by one, while the count of rigs targeting natural gas and miscellaneous rigs were both unchanged…for a quick snapshot of this week’s rig count, we are again including below a screenshot of the rig count summary table from Baker Hughes…in the table below, the first column shows the active rig count as of July 31st, the second column shows the change in the number of working rigs between last week’s count (July 24th) and this week’s (July 31st) count, the third column shows last week’s July 24th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday of the same week 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 Friday, the 1st of August, 2025…

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