tables and graphics for September 23rd

rig count summary:

September 22 2017 rig count summary

distillates supplies:

September 20 2017 distillate supplies as of Sept 15

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US oil prices still 13% lower than overseas; OPEC report shows glut vanishing; US gasoline supplies see a record drop..

the $50 a barrel level, as Texas Gulf Coast refineries returned to operation and began to soak up some of the oil glut that had built up during their shutdown…however, front month Brent oil prices, the international benchmark, did rise every day this week and ended at $56.62 a barrel, 13.5% higher than the US price for the same kind of oil…John Kemp at Reuters included a graph of that differential between the two oils for two contract months in one of his articles this week, which we’ll include below:

Sept 12 2017 Brent premium over WTI

the above graph accompanied John Kemp’s article titled ‘Mind the gap: Brent and WTI point in opposite directions, published on Tuesday of this week, and it tracks the difference between the price for North Sea Brent, the global oil benchmark, and West Texas Intermediate (WTI), the US benchmark, which is what we quote every time we speak of US oil prices…the mustard colored graph above shows the excess price of Brent over WTI in dollars per barrel for a contract to deliver each type of oil in November, while the white graph shows the excess price of Brent over WTI in dollars per barrel for a contract to deliver each type of oil in April of 2018…

there had long been a discount on US oil before the export ban on it was lifted as part of a budget deal signed by Obama at the end of 2015, which subsequently brought US oil up to parity with the global price…however, that parity did not last long, and for most of 2016, US WTI oil traded around a dollar below the international price…however, as the chart above indicates, the price differential started rising early in 2017, and had reached an average of around $2.50 a barrel before Harvey shut down Gulf Coast refineries, creating a glut of oil on the Gulf Coast, and shut down the ports, so that oil could not be exported…at that time, November US crude fell in price, while Brent did not, resulting in a premium for Brent of as much as $6, which continued through this week…a smaller gap opened up between the prices for Brent and WTI for April 2018 delivery in white, not particularly logical, as it’s not likely that any impact from Harvey would persist that far into the future…of course, if oil overseas continues fetching $6 a barrel more than what oil in the US sells for, then US oil will be exported into those higher priced markets until such time as that price gap closes…

OPEC’s September oil report

we’re going start by reviewing OPEC’s September Oil Market Report (covering August OPEC & global oil data), which was released on Tuesday of this past week….the first table from this report that we’ll include here is from page 67 of that OPEC pdf, and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months as the column headings indicate…for all their official production measurements, OPEC uses an average of estimates from six “secondary sources”, namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, ‎the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA) and the industry newsletter Petroleum Intelligence Weekly, as an impartial adjudicator as to whether their output quotas and production cuts are being met, to resolve any potential disputes that could arise if each member reported their own figures…  

August 2017 OPEC cude output via secondary sources

from the above table of official oil production data, we can see that OPEC oil output decreased by 79,100 barrels per day in August, to 32,755,000 barrels per day, from a July oil production total of 32,834,000 barrels per day, a figure that was originally reported as 32,869,000 barrels per day (for your reference, here is the table of the official July OPEC output figures before this month’s revisions)…as we can see in the far right column, the reason that OPEC’s output fell 79,100 barrels per day was largely due to a 112,300 barrel per day decrease in output from Libya, as the 138,300 barrel per day increase from Nigeria was offset by modest decreases in production by Gabon, Iraq, the United Arab Emirates and Venezuela…..these totals bring most OPEC members other than Iraq close to their agreed to production quota, as can be seen in the table below:

Sept 2017 OPEC production and targets as of August via Platts

the above table is from the “OPEC guide” page at S&P Global Platts: the first column of numbers shows average daily production in millions of barrels of oil per day for each of the OPEC members over the first eight months of this year, and the 2nd column shows the allocated daily production in millions of barrels of oil per day for each member, as was agreed to at their November meeting, and the 3rd column shows how much each has averaged over or under their quotas for the eight months of this year that OPEC has curtailed production…as you can see from the above, most OPEC members are pretty close to meeting their commitment to cutting their production back 4%, except for Iraq, who has consistently overproduced by roughly 2%…

the next graphic we’ll include shows us both OPEC and world oil production monthly on the same graph, over the period from September 2015 to August 2017, and it comes from page 68 of the September OPEC Monthly Oil Market Report….the light blue bars represent OPEC oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the metrics for global output shown on the right scale…

August 2017 OPEC report global supply

the preliminary OPEC data indicates that total global oil production fell to 96.75 million barrels per day in August, down by .41 million barrels per day from a July total of 97.16 million barrels per day, which was revised .14 million barrels per day lower than the 97.30 million barrels per day global oil output for July that was reported a month ago…global oil output for August was also 1.10 million barrels per day higher than the 95.65 million barrels of oil per day that was being produced globally in August a year ago (see last September’s OPEC report for the year ago data)…OPEC’s August production of 32,755,000 barrels per day thus represented 33.9% of what was produced globally, a small increase from the revised 33.8% OPEC share in June…OPEC’s August 2016 production, excluding ex-member Indonesia, was at 32,512,000 barrels per day, so even after the alleged production cuts, the 13 OPEC members who were part of OPEC last year, excluding new member Equatorial Guinea, are still producing more oil than they were producing a year ago, when they were supposedly producing flat out…

after eight months of relatively lower production we can see on the above graph, there was finally a small deficit in the amount of oil being produced globally, as the next table from the OPEC report will show us..    

August 2017 OPEC report global oil demand

the table above comes from page 37 of the September OPEC Monthly Oil Market Report, and it shows regional and total oil demand in millions of barrels per day for 2016 in the first column, and OPEC’s forecast for oil demand by region and globally over 2017 over the rest of the table…on the “Total world” line of the fourth column, we’ve circled in blue the figure we’re interested in, which is their estimate for global oil demand for the third quarter of 2017…

OPEC’s estimate is that during the 3rd quarter of this year, all oil consuming areas of the globe will use be using 97.57 million barrels of oil per day, which is an upward revision from their prior estimate of 97.28 million barrels of oil per day…note that they have also revised global oil demand for the second quarter 400,000 barrels per day higher, to 96.05 barrels per day, and revised demand for the first quarter 150,000 barrels per day higher, to 95.54 barrels per day, at the same time…meanwhile, as OPEC showed us in the oil supply section of this report and the summary supply graph above, after the OPEC and non-OPEC production cuts, the world’s oil producers were only producing 96.75 million barrels per day during August, which means that during this summer month of greatest demand, there was a shortfall of around 820,000 barrels per day of global oil production in August…also note that global production for July was concurrently revised lower, to 97.16 million barrels per day, so that means there was also a deficit of 410,000 barrels per day in July output, which we had previously figured to be a global oil surplus of around 20,000 barrels per day…in addition, the 400,000 barrels per day upward revision to second quarter demand reduces the June surplus to 1,080,000 barrels per day, and turns what we had previously figured to be a 270,000 barrels per day surplus in May into a 130,000 barrel per day deficit….April’s revised figures now show a 440,000 barrel per day deficit, and prior to that the global oil surplus during March would be revised to 630,000 barrels per day, and average surpluses over January and February would be reduced to around 850,000 barrels per day….taken together, this data means that after eight months of OPEC production cuts, roughly 48 million barrels of oil have been added to the global oil glut since the 1st of the year, quite a bit less than the 135 million barrel addition last month’s report indicated..  

last, we’ll include a graph of the total OPEC oil output for the 13 long term OPEC members included in this report, so we can see how this month’s production stacks up compared to historical figures…

August 2017 OPEC oil production historical graph

the above graph, taken from the “OPEC August Crude Oil Production” post at the Peak Oil Barrel blog, shows total oil production, in thousands of barrels per day, for the 13 members of OPEC, for the period from January 2005 to August 2017, using the same official data from multiple secondary sources as we saw in the first table above…here we can obviously see that OPEC’s production for June, July and August is up quite a bit from their previous production this year and is even approaching the record of 33,374,000 million barrels per day the cartel produced in November, a level achieved because they all over produced so that their cuts would be off a higher base…so even as they’ve cut their oil production from that level, their output for each of the eight months of this year was actually higher than in each of the same months months a year ago, leaving OPEC well on track to exceed their 2016 production this year, even as they attempt to orchestrate the oil markets with reports of their “reduced” production…

The Latest US Oil Data from the EIA

this week’s US oil data from the US Energy Information Administration, covering details for the week ending September 8th, continued to show the effect of Hurricane Harvey on oil supplies and consumption as it transversed Texas and the adjacent Gulf of Mexico the prior week; it indicates a further drop in oil imports, as ship channels in the affected ports remained silted, but a rebound in oil exports, as the primary US oil export facilities at Corpus Christi were reopened, a recovery in oil production, as output from the Eagle Ford shale and the Gulf came back online, and a small drop in per diem oil refining, as the major refinery shutdowns impacted both this week and the last half of the prior one…

our imports of crude oil fell by an average of 603,000 barrels per day to an average of 6,480,000 barrels per day during the week, while at the same time our exports of crude oil rose by 621,000 barrels per day to an average of 774,000 barrels per day, which meant that our effective imports netted out to an average of 5,706,000 barrels per day during the week, 1,224,000 barrels per day less than during the prior week…at the same time, our field production of crude oil rose by 572,000 barrels per day to an average of 9,353,000 barrels per day, which means that our daily supply of oil coming from net imports and from wells totaled an average of 15,059,000 barrels per day during the cited week…

during the same period, US oil refineries were using 14,078,000 barrels of crude per day, 394,000 barrels per day less than they used during the prior week, while at the same time 614,000 barrels of oil per day were being added to oil storage facilities in the US…hence, this week’s crude oil figures from the EIA seem to indicate that our total supply of oil from net imports and from oilfield production was 367,000 more barrels per day than what refineries reported they used during the week plus what was added to storage…to account for that discrepancy, the EIA needed to insert a (-367,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum  Balance Sheet to make the data for the supply of oil and the consumption of it balance out, which they label in their footnotes as “unaccounted for crude oil”…

further details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports fell to an average of 7,565,000 barrels per day, which was 7.6% below the imports of the same four-week period last year….this week’s 572,000 barrel per day increase in our crude oil production was the result of a 582,000 barrels per day rebound in oil output from wells in the lower 48 states and a 10,000 barrel per day decrease in oil output from Alaska…the 9,353,000 barrels of crude per day that were produced by US wells during the week ending September 8th was still 1.9% less than the 9,530,000 barrels of crude per day being produced during the pre-hurricane week ending August 25th, but 6.6% more than the 8,770,000 barrels per day we were producing at the end of 2016, and 10.1% more than the 8,493,000 barrels per day of oil we produced during the during the week ending September 9th a year ago, while it was 2.7% below the record US oil production of 9,610,000 barrels per day set during the week ending June 5th 2015… 

US oil refineries were operating at 77.7% of their capacity in using those 14,078,000 barrels of crude per day, down from the of 79.7% of capacity the prior week, and the lowest capacity utilization rate since the end of September 2008….the 14,078,000 barrels of oil refined this week was the least oil refined in the US since March 8th, 2013, 20.6% less that was being refined two weeks earlier, and 15.9% less than the 16,730,000 barrels of crude per day.that were being processed during week ending September 9th, 2016, when refineries were operating at 92.9% of capacity, and roughly 10% below the 10 year average of 15.7 million barrels of crude being refined per day at this time of year…

even with the drop in US oil refining, gasoline production from our refineries rose by 371,000 barrels per day to 9,888,000 barrels per day during the week ending September 8th…that brought this week’s gasoline output almost up to the level of the 9,900,000 barrels of gasoline that were being produced daily during the comparable week a year ago….however, our refineries’ production of distillate fuels (diesel fuel and heat oil) fell by 519,000 barrels per day to 3,973,000 barrels per day at the same time, which was 19.5% less than the 4,933,000 barrels per day of distillates that were being produced during the week ending September 9th last year…. 

even with this week’s increase in gasoline production, our end of the week gasoline inventories fell by 8,428,000 barrels to 226,738,000 barrels by September 8th, the 10th decrease in gasoline inventories in 13 weeks and the largest drop on record…that was as our domestic consumption of gasoline rose by 456,000 barrels per day to 9,619,000 barrels per day, and as our exports of gasoline rose by 209,000 barrels per day to 528,000 barrels per day, while our imports of gasoline rose by 81,000 barrels per day to 556,000 barrels per day….with significant gasoline supply withdrawals in 10 out of the last 13 weeks, our gasoline inventories are now 4.4% below last September 9th’s level of 228,360,000 barrels, even as they are still fractionally higher than the 217,387,000 barrels of gasoline we had stored on September 11th of 2015, and roughly 3.4% above the 10 year average of gasoline supplies for this time of the year… 

meanwhile, with the big decrease in our distillates production, our supplies of distillate fuels fell by 3,215,000 barrels to 144,552,000 barrels over the week ending September 8th, as the amount of distillates supplied to US markets, a proxy for our domestic consumption, slipped 6,000 barrels per day to 4,057,000 barrels per day, while our exports of distillates fell by 227,000 barrels per day to 511,000 barrels per day and our imports of distillates rose by 26,000 barrels per day to 136,000 barrels per day…after this week’s decrease, our distillate inventories were 11.2% lower than the 162,754,000 barrels that we had stored on September 9th, 2016, and 6.1% lower than the distillate inventories of 153,963,000 barrels of distillates that we had stored on September 11th of 2015, even as they remain fractionally higher than the 10 year average for distillates stocks for this time of the year

finally, with another big drop in use of crude by our refineries, our commercial crude oil inventories rose for the 2nd week in a row, increasing by 5,888,000 barrels to 468,241,000 barrels as of September 8th, just the 4th increase in the past 24 weeks…while our oil inventories as of September 8th were 2.5% below the 480,166,000 barrels of oil we had stored on September 9th of 2016, they were 10.4% higher than the 423,958,000 barrels in of oil that were in storage on September 11th of 2015, and much higher than the normal level for our oil supplies in the years before the oil glut started building up, ie., 41.4% higher than the 331,101,000 barrels of oil we had in storage on September 12th of 2014…  

This Week’s Rig Count

US drilling activity decreased for the 8th time in the past 12 weeks during the week ending September 15th, after a string of 23 consecutive weekly increases earlier this year, with both oil and gas drilling seeing pullbacks….Baker Hughes reported that the total count of active rotary rigs running in the US fell by 8 rigs to 936 rigs in the week ending Friday, which was 430 more rigs than the 506 rigs that were deployed as of the September 16th report in 2016, while it was still less than half of the recent high of 1929 drilling rigs that were in use on November 21st of 2014….

the number of rigs drilling for oil was down by 7 rigs to 749 rigs this week, their 6th week without an increase, which still left oil rigs up by 333 over the past year, while their count remained far from the recent high of 1609 rigs that were drilling for oil on October 10, 2014…at the same time, the count of drilling rigs targeting natural gas formations decreased by 1 rig to 186 rigs this week, which was still 97 more rigs than the 89 natural gas rigs that were drilling a year ago, but still way down from the recent high of 1,606 natural gas rigs that were deployed on August 29th, 2008…in addition, one rig that was classified as miscellaneous was still drilling this week, just as there was also a miscellaneous rig that was deployed a year ago…

with new drilling starting on a platform off the Louisiana coast, the Gulf of Mexico rig count increased by 1 rig to 17 rigs this week, which was also the total US offshore count…in both cases, that was down from 20 rigs offshore in the Gulf and for total US a year ago…however, a platform that had seen drilling on an inland lake in southern Louisiana was shut down this week, leaving an ‘inland waters’ count of 4 rigs, the same as a year ago…

the count of active horizontal drilling rigs rose by 2 rigs to 795 rigs this week, which was up by 401 rigs from the 394 horizontal rigs that were in use in the US on September 16th of last year, but was also down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014….on the other hand, the vertical rig count was down by 8 rigs to 67 vertical rigs this week, which was still up from the 64 vertical rigs that were deployed during the same week last year…at the same time, the directional rig count was down by 2 rigs to 74 rigs this week, which was still up from the 48 directional rigs that were deployed on September 16th of 2016….

the details on this week’s changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes…the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows weekly and year over year rig count changes for the major US geological oil and gas basins…in both tables, the first column shows the active rig count as of September 15th, the second column shows the change in the number of working rigs between last week’s count (September 8th) and this week’s (September 15th) count, the third column shows last week’s September 8th active rig count, the 4th column shows the change between the number of rigs running on Friday and the equivalent Friday a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was for the 16th of September, 2016…     

September 15 2017 rig count summary

this week’s details are pretty simple; there were no other changes in states or basins that aren’t shown on the table above…

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August’s consumer and producer prices, retail sales, and industrial production; July’s business inventories and JOLTS

reports released this past week included Retail Sales for August and Business Sales and Inventories for July from the Census Bureau, August Industrial Production and Capacity Utilization from the Fed, and the August Consumer Price Index, the August Producer Price Index, the Job Openings and Labor Turnover Survey (JOLTS) report for July and the Regional and State Employment and Unemployment report for August, all from the Bureau of Labor Statistics…this week also saw the release of the Empire State Manufacturing Survey for September from the New York Fed, which covers New York and northern New Jersey; they reported their headline general business conditions index fell from +25.2 in August to +24.4 in September, still suggesting that First District manufacturing was growing at a robust pace…

Consumer Prices Up 0.4% in August on Higher Prices for Gasoline, Shelter

the consumer price index rose 0.4% in August, as much higher prices for gasoline and shelter were only slightly offset by lower prices for groceries…the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices rose 0.4% in August after rising 0.1% in July, being unchanged in June and  falling 0.1% in May, but after rising 0.2% in April….the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, rose from 244.786 in July to 245.519 in August, which left it statistically 1.939% higher than the 240.849 index reading in August of last year…with prices for energy much higher, seasonally adjusted core prices, which exclude food and energy, rose by 0.2% for the month, as the unadjusted core index rose from 251.936 to 252.460, which left the core index 1.684% ahead of its year ago reading of 248.278…

the volatile seasonally adjusted energy price index was 2.8% higher in August after it had fallen 0.1% in July, 1.6% in June, and 2.7% in May, but after it rose by 1.1% in April, fell by 3.2% in March and by 1.0% in February, but after it had risen by 4.0% in January, 1.5% in December, 1.2% in November, 3.5% in October, and by 2.9% last September….thus, energy prices are now averaging 6.4% higher than a year ago, after seeing negative year over year comparisons through most of 2015 and 2016…prices for energy commodities were up by 6.1% in August, while the index for energy services fell by 0.1%, after falling  0.2% in July and 0.5% in June… the increase in the energy commodity index included a 6.3% jump in the price of gasoline, the largest component, and a 2.9% increase in the price of fuel oil, while prices for other fuels, including propane, kerosene and firewood, rose by an average of 1.1%…within energy services, the index for utility gas service fell by 0.5% after decreasing by 2.3% in July, but utility gas is still priced 5.1% higher than it was a year ago, while the electricity price index was unchanged, after increasing by 0.4% in July…energy commodities are now priced 10.3% above their year ago levels, with gasoline prices averaging 10.4% higher than they were a year ago…meanwhile, the energy services price index is now 2.9% higher than last August, as electricity prices have risen by 2.3% over that period..

the seasonally adjusted food price index was up 0.1% in August, after rising 0.2% in July, being unchanged in June, rising 0.2% in May, 0.2% in April, 0.3% in March, 0.2% in February, and 0.1% in January, but after being unchanged in each of the prior 6 months, as prices for food purchased for use at home fell 0.2% in August, while prices for food bought to eat away from home was 0.3% higher, as prices at fast food outlets and at full service restaurants both rose 0.2%, while food at work sites and schools rose 3.9%…in the food at home categories, the price index for cereals and bakery products increased by 0.3%, as prices for bread other than white rose 1.3% and cookie prices rose 1.4%…the price index for the meats, poultry, fish, and eggs group was down 0.2% as roast beef prices fell 2.1% and ham prices fell 2.2%, while the index for dairy products was 0.4% lower on 1.5% decrease in the price of fresh whole milk…the fruits and vegetables index was 0.2% lower on a 1.0% decrease in prices for fresh fruits, as prices for oranges fell 5.2%…at the same time, the beverages index was 0.4% lower as roast coffee prices were down 2.4% and tea prices fell 1.4%….lastly, prices in the ‘other foods at home’ category were 0.1% lower on average, as salad dressing prices fell 2.1% while prepared frozen foods prices were 1.4% lower…….among food at home line items, only bacon, which is now priced 12.5% higher than a year ago has seen a price change greater than 10% over the past year…the itemized list for price changes in over 100 separate food items is included at the beginning of Table 2, which gives us a line item breakdown for prices of more than 200 CPI items overall

among the seasonally adjusted core components of the CPI, which rose by 0.2% in August and by 0.1% in each of the prior 4 months, the composite of all goods less food and energy goods was down 0.1% in August, while the more heavily weighted composite for all services less energy services was 0.4% higher….among the goods components, which will be used by the Bureau of Economic Analysis to adjust August retail sales for inflation in national accounts data, the index for household furnishings and supplies was unchanged as prices for bedroom furniture rose 2.6% while prices for living room, kitchen, and dining room furniture fell 1.0%…the apparel price index, meanwhile, was 0.1% higher, as prices for boys’ apparel rose 9.6% while prices for women’s dresses fell 4.9%….prices for transportation commodities other than fuel were down 0.1%, as prices for new cars and prices for used cars and trucks both fell 0.2%…prices for medical care commodities were also 0.1% lower on a 0.5% decrease in prices for nonprescription drugs…at the same time, the recreational commodities index fell 0.4% on a 2.0% drop in TV prices and 2.7% lower prices for video equipment other than TVs…meanwhile, the education and communication commodities index was 0.8% lower on a 1.1% decrease in prices for computer software and accessories and 1.3% lower prices for educational books and supplies…lastly, a separate price index for alcoholic beverages was up 0.1%, while the price index for ‘other goods’ was down 0.4% on 1.1% decreases in the indexes for hair, dental, shaving, and miscellaneous personal care products and for stationery, stationery supplies, and gift wrap..

within core services, the price index for shelter rose 0.5% on a 0.4% increase in rents, a 0.3% increase in owner’s equivalent rent, and a 5.1% increase in costs for lodging away from home at hotels and motels, while household operation costs were 0.3% higher…the index for medical care services was up 0.2% as prices for prescription eyeglasses and eye care rose 1.4%, while the transportation services index was 0.4% higher despite a 2.1% decrease in car and truck rentals on a 1.0% increase in motor vehicle insurance…at the same time, the recreation services price index was up 0.5% as admissions to movies, theaters, and concerts rose 1.0%, while the index for education and communication services was unchanged as a 0.9% increase in technical and business school tuition and fees was offset by a 0.3% decrease for college tuition….lastly, the index for other personal services was 0.1% higher as tax return preparation and other accounting services were 0.8% higher…among core prices, only the index for clocks, lamps, and decorator items, which is now 12.5% lower than a year ago, prices for toys, which have fallen by 10.45, and prices for wireless phone services, which have now dropped 13.2% from a year ago, have seen prices drop by more than 10% over the past year, while no line item has seen prices rise by a double digit magnitude in that span..   

Retail Sales Down by 0.2% in August after June and July Sales Revised Lower

seasonally adjusted retail sales were down in August after retail sales for June and July were revised much lower…the Advance Retail Sales Report for August (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $474.8 billion during  the month, which was down 0.2 percent (±0.5%)* from July’s revised sales of $475.8 billion but 3.2 percent (±0.7 percent) above the adjusted sales in August of last year…July’s seasonally adjusted sales were revised from $478.9 billion to $475.8 billion, while June sales were also revised lower, from $476.0 billion to $474.5 billion, with this release….estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated sales actually rose 2.7%, from $476,699 million in July to $489,851 million in August, while they were up 3.5% from the $473,169 million of sales in August a year ago…the revision to June sales means that 2nd quarter sales were roughly $1.5 billion lower than previously reported, which would be enough to knock 0.12 percentage points from 2nd quarter GDP when the 3rd estimate is published at the end of the month…

included below is the table of the monthly and yearly percentage changes in retail sales by business type taken from the August Census Marts pdf….the first double column below gives us the seasonally adjusted percentage change in sales for each type of retail business from July to August in the first sub-column, and then the year over year percentage change for those businesses since last August in the 2nd column; the second pair of columns gives us the revision of last month’s July advance monthly estimates (now called “preliminary”) as revised in this report, likewise for each business type, with the June to July change under “Jun 2017 (r)evised” and the revised July 2016 to July 2017 percentage change in the last column shown…for your reference, our copy of the table of last month’s advance July sale estimates, before this month’s revision, is here….

August 2017 retail sales table

Industrial Production Down 0.9% in August on Weather

August saw the largest drop in US industrial production since May 2009, as Hurricane Harvey impacted Gulf of Mexico and inland oil & gas production and southeast Texas manufacturing and refining, while unseasonably cool temperatures on the East Coast reduced the demand for electricity….the Fed’s G17 release on Industrial production and Capacity Utilization report indicated that industrial production fell by 0.9% in August, after rising by a revised 0.4% in July…as a result, industrial production is only up 1.5% from a year ago, as compared to last month’s year over year increase of 2.2%….the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, fell to 104.7 in August from 105.7 in July, which was revised from the 105.5 that was reported for July a month ago…at the same time, the June reading for the index was unrevised at 105.3, the May reading for the index was revised up from 104.9 to 105.1, and the April index reading was revised from 104.7 to 104.9…

the manufacturing index, which accounts for more than 77% of the total IP index, fell by 0.3, from 103.6 in July to 103.3 in August, after July’s manufacturing index was revised up from 103.4, and is now up 1.5% from a year ago….meanwhile, the mining index, which includes oil and gas well drilling, fell from 111.2 in July to 110.3 in August, after the July index was revised up from 111.0….however, the mining index still remains 9.7% higher than it was a year ago….finally, the utility index, which often fluctuates due to above or below normal temperatures, fell by 5.5% in August after rising a revised 1.5% in July and falling a revised 1.0% in June, and is now 7.8% below last August’s level…

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 fell from 76.9% in July to 76.1% in August…capacity utilization of NAICS durable goods production facilities rose from 74.3 in July to 74.5 in August, after July’s figure was revised down from 74.4%, while capacity utilization for non-durables producers fell from an upwardly revised 77.9% to 77.2%…capacity utilization for the mining sector fell to 83.9% in August from 84.8% in July, which was originally reported as 84.6%, while utilities were operating at 73.9% of capacity during August, down from their 78.2% of capacity during July, which was revised up from 78.1%…for more details on capacity utilization by type of manufacturer, see Table 7: Capacity Utilization: Manufacturing, Mining, and Utilities, which shows the historical capacity utilization figures for a dozen types of durable goods manufacturers, 8 classifications of non-durable manufacturers, mining, utilities, and capacity utilization for a handful of other special categories….

Producer Prices Up 0.2% in August on Higher Priced Energy Commodities

the seasonally adjusted Producer Price Index (PPI) for final demand rose 0.2% in August, as prices for finished wholesale goods increased 0.5%, while margins of final services providers increased by 0.1%…this followed a July report that indicated the PPI was down 0.1%, with prices for finished wholesale goods down 0.1%, and margins of final services providers down 0.2%, and a June report that indicated the PPI was up 0.1%, with prices for finished wholesale goods up 0.1%, and margins of final services providers up 0.2%….on an unadjusted basis, producer prices remain 1.9% higher than a year earlier, same as in June, but down from the 2.5% YoY increase seen in April, which had been the largest year over year increase in the PPI since February 2012…

as we noted, the price index for final demand for goods, aka ‘finished goods’, rose 0.5% in August, after slipping 0.1% in July, rising by 0.1% in June, falling by 0.6% in May, rising by 0.5% in April, falling by 0.2% in March, and rising by 0.4% in February, and by 1.0% in January… the index for wholesale energy prices rose 3.3% in August, while the price index for wholesale foods fell 1.3% and the index for final demand for core wholesale goods (ex food and energy) was 0.2% higher…the largest wholesale energy price changes were a 14.1% increase in the wholesale price of home heating oil and distillates and 13.4% in the wholesale price of LP gas, while wholesale gasoline prices were up 9.5%….meanwhile, a 8.6% decrease in the wholesale price of grains and a 6.5% decrease in the wholesale price for beef and veal pulled the wholesale food price index lower….among wholesale core goods, the index for industrial chemicals was up 2.9%, while wholesale prices for sanitary paper products were 1.1% lower…

at the same time, the index for final demand for services rose 0.1% in August, after falling by 0.2% in July, rising by 0.2% in June, and a revised 0.5% in May and 0.4% in April, as the July index for final demand for trade services was unchanged, the index for final demand for transportation and warehousing services rose 0.3%, while the index for final demand for services less trade, transportation, and warehousing services was 0.1% higher….among trade services, seasonally adjusted margins for fuels and lubricants retailers decreased 6.8%, while margins for TV, video, and major household appliances retailers rose 13.7%… among transportation and warehousing services, margins for truck transporters of freight were 0.9% higher…in the core final demand for services index, prices for consumer loans (partial) increased 1.7%..

this report also showed the price index for processed goods for intermediate demand was 0.4% higher, after falling 0.1% in July and 0.2% in June, but after rising by a revised 0.1% in May and 0.5% in April….the price index for intermediate energy goods rose 1.4%, while prices for intermediate processed foods and feeds fell 1.0%, and the core price index for processed goods for intermediate demand less food and energy was 0.4% higher, as prices for industrial chemicals rose 2.9%…prices for intermediate processed goods are now 4.1% higher than in August a year ago, now the tenth consecutive year over year increase, after 16 months of negative year over year comparisons, as intermediate goods prices fell every month from July 2015 through March 2016….

meanwhile, the price index for intermediate unprocessed goods fell 0.7% in August, after falling 0.4% in July, rising 1.5% in June, falling a revised 2.0% in May, and rising a revised 1.6% in April….the price index for crude energy goods rose 4.0%, as crude oil prices rose 11.0%, while the index for unprocessed foodstuffs and feedstuffs fell 5.2%, as prices for wheat dropped 20.6% and prices for slaughter steers and heifers fell 10.0%…in addition, the index for core raw materials other than food and energy materials rose 0.9%, as prices for iron and steel scrap rose 5.4% and wholesale prices for copper scrap rose 4.1% …this raw materials index is now up 6.8% from a year ago, up from the year over year increase of 5.2% that we saw in June…

lastly, the price index for services for intermediate demand rose 0.2% in August after falling 0.3% in July, which was its first decrease since last September… the index for trade services for intermediate demand was 0.5% lower, as margins for intermediate chemicals and chemical products wholesalers fell 4.3 percent…the index for transportation and warehousing services for intermediate demand was up 0.3%, as intermediate prices for air mail and package delivery services other than USPS rose 1.3%…at the same time, the core price index for services less trade, transportation, and warehousing for intermediate demand was also 0.3% higher, as margins for business loans (partial) rose 5.3%, and intermediate services related to portfolio management rose 1.9%…over the 12 months ended in June, the year over year price index for services for intermediate demand, which has never turned negative on an annual basis, is now 2.6% higher than it was a year ago…

July Business Sales and Business Inventories Both Up 0.2%

after the release of the August retail sales report, the Census Bureau released the composite Manufacturing and Trade Inventories and Sales report for July(pdf), which incorporates the revised July retail data from that August report and the earlier published wholesale and factory data to give us a complete picture of the business contribution to the economy for that month….according to the Census Bureau, total manufacturer’s and trade sales were estimated to be valued at a seasonally adjusted $1,358.8 billion in July, up 0.2 percent (±0.1%) from June revised sales, and up 4.9 percent (±0.4 percent) from July sales of a year earlier…note that total June sales were concurrently revised down from the originally reported $1,356.8 billion to $1,356,076 million….manufacturer’s sales were up 0.3% to $474,337 million in July, and retail trade sales, which exclude restaurant & bar sales from the revised July retail sales reported earlier, also rose 0.3% to $419,400 million, while wholesale sales fell 0.1% to $446,437 million…

meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $1,873.9 billion at the end of July, up 0.2% (±0.1%) from June, and 3.0 percent (±0.3 percent) higher than in July a year earlier…the value of end of June inventories was revised up slightly from the $1,869.3 billion reported last month to $1,869.4 billion…seasonally adjusted inventories of manufacturers were estimated to be valued at $651,560 million, 0.2% higher than in June, inventories of retailers were valued at $619,956 million, 0.1% less than in June, while inventories of wholesalers were estimated to be valued at $602,352 million at the end of July, up 0.6% from June…

Job Openings were at a Record High in July,  with Hiring and Job Quitting Both Up

the Job Openings and Labor Turnover Survey (JOLTS) report for July from the Bureau of Labor Statistics estimated that seasonally adjusted job openings rose by 54,000, from 6,116,000 in June to a record high of 6,170,000 in July, after June job openings were revised lower, from 6,163,000 to 6,116,000…July jobs openings were also 3.3% higher than the 5,973,000 job openings reported for July a year ago, as the job opening ratio expressed as a percentage of the employed remained unchanged at 4.0% in July, which was also unchanged from a year ago…job openings increased in several sectors, with the 70,000 job opening increase to 253,000 openings in the transportation, warehousing, and utilities sector the largest increase for the month (see table 1 for more details)…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 July, seasonally adjusted new hires totaled 5,501,000, up by 69,000 from the revised 5,432,000 who were hired or rehired in June, as the hiring rate as a percentage of all employed rose from 3.7% in June to 3.8% in July, which was also up from 3.7% in July a year earlier (details of hiring by sector since March are in table 2)….meanwhile, total separations rose by 23,000, from 5,309,000 in June to 5,332,000 in July, while the separations rate as a percentage of the employed was unchanged at 3.6%, which was up from the separations rate of 3.5% in July a year ago (see table 3)…subtracting the 5,332,000 total separations from the total hires of 5,501,000 would imply an increase of 169,000 jobs in July, a bit less than the revised payroll job increase of 189,000 for July reported by the August establishment survey last week, but still not an unusual difference and well within the expected +/-115,000 margin of error in these incomplete samplings

breaking down the seasonally adjusted job separations, the BLS finds that 3,164,000 of us voluntarily quit our jobs in July, up by 34,000 from the revised 3,130,000 who quit their jobs in June, while the quits rate, widely watched as an indicator of worker confidence, inched up to 2.2% of total employment, from 2.1% in June and from 2.1% a year earlier (see details in table 4)….in addition to those who quit, another 1,783,000 were either laid off, fired or otherwise discharged in July, down by 23,000 from the revised 1,806,000 who were discharged in June, as the discharges rate remained unchanged at 1.2% of all those who were employed during the month, which was up from the discharges rate of 1.1% a year earlier….meanwhile, other separations, which includes retirements and deaths, were at 384,000 in July, up from 373,000 in June, for an ‘other separations rate’ of 0.3%, which was unchanged from both June and from July of last year….both seasonally adjusted and unadjusted details by industry and by region on hires and job separations, and on job quits and discharges can be accessed using the links to tables at the bottom of the press release

 

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

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graphics and tables for September 16th

retail sales:

August 2017 retail sales table

rig count summary:

September 15 2017 rig count summary

Brent vs WTI:

Sept 12 2017 Brent premium over WTI

official OPEC output:

August 2017 OPEC cude output via secondary sources

OPEC targets:

Sept 2017 OPEC production and targets as of August via Platts

global production:

August 2017 OPEC report global supply

global oil demand:

August 2017 OPEC report global oil demand

OPEC output chart:

August 2017 OPEC oil production historical graph

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slow recovery of Texas ports, refineries; US oil & gasoline prices remain distorted

most of news out of the oil and gas patch this week related to the gradual recovery of Texas and Louisiana oil port operations, Gulf of Mexico and Eagle Ford oil and gas production, Gulf refinery operations and the related product distribution pipelines…by Monday, the Colonial Pipeline from Houston to the New York area, which supplies about 60% of the incoming oil products to the Atlantic Coast, resumed pumping distillates and jet fuel; by Tuesday, they also resumed pumping gasoline…by Wednesday, almost half of the refinery capacity that had been shut down at the height of the flooding was coming back, with just 4 refineries still remaining totally shut down, and 13 refineries in the process of restarting, which we’ve learned is a fraught and dangerous procedure…at the beginning of the week, at least 54 tankers with capacity to carry more than 33 million barrels remained in a queue off the Gulf Coast, and although the ports around Houston were open, draft restrictions due to silting of the ship channels remained in place, and as a result Texas oil imports were only proceeding at one fifth of their normal pace…

oil prices remained volatile; US contract prices for October fell to as low as $45.96 a barrel on Wednesday of last week as export ports and refineries closed, then moved back up to as high as $49.16 a barrel this Wednesday, as Harvey damage concerns eased, only to fall back to $47.48 a barrel on Friday as the refinery recovery seemed to be going slower than expected…note that these price quotes are only for US oil and also only for the near term; for instance, the front month price quote for North Sea Brent oil, the international benchmark price, only fell to as low as $50.73 a barrel on Wednesday of last week, and then recovered to close this week at $53.78 a barrel, more than 13% higher than the US price for oil…at the same time, US oil prices for December delivery only fell to close as low as 46.94 at last week’s nadir, and then recovered to $48.56 a barrel on Friday, whereas the October 2018 contract price for oil only fell to as low as $48.26 a barrel on Wednesday of last week, and then recovered to close this week at $49.94 a barrel, more than 5% higher than the current oil price…meanwhile, contract prices for October gasoline had risen by as much as 28 cents a gallon to $1.7792 a gallon last week; those prices fell every day this week and ended Friday at $1.6476 a gallon as supply threats were gradually ameliorated…meanwhile, gasoline prices at the pump averaged 30 cents a gallon higher nationally and 50 cents a gallon higher in Texas, as orders to evacuate all 5.6 million people living in Florida put new pressure on gasoline supplies in the Southeast…

The Latest US Oil Data from the EIA

this week’s US oil data from the US Energy Information Administration, covering details for the week ending September 1st, largely reflects the effect of Hurricane Harvey on oil supplies and consumption as it stalled over Texas and the adjacent Gulf of Mexico for most of the week; thus it indicates a drop in oil imports, as ships avoided the affected ports, a drop in oil exports, as the primary US oil export facilities were shut down, a drop in oil production, as output from the Eagle Ford shale was shut in as the hurricane transversed the area, a drop in oil refining, as up to 25% of refining capacity was shut down by the end of the week, and an increase in US crude oil supplies, because without refineries, crude oil is pretty useless…

our imports of crude oil fell by an average of 822,000 barrels per day to an average of 7,083,000 barrels per day during the week, while at the same time our exports of crude oil fell by 749,000 barrels per day to an average of 153,000 barrels per day, which meant that our effective imports netted out to an average of 6,930,000 barrels per day during the week, 73,000 barrels per day less than during the prior week…at the same time, our field production of crude oil fell by 749,000 barrels per day to an average of 8,781,000 barrels per day, which means that our daily supply of oil coming from net imports and from wells totaled an average of 15,711,000 barrels per day during the cited week…

during the same period, US oil refineries were using 14,472,000 barrels of crude per day, 3,253,000 barrels per day less than they used during the prior week, while at the same time 614,000 barrels of oil per day were being added to oil storage facilities in the US…hence, this week’s crude oil figures from the EIA seem to indicate that our total supply of oil from net imports and from oilfield production was 625,000 more barrels per day than what refineries reported they used during the week plus what was added to storage…to account for that discrepancy, the EIA needed to insert a (-625,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum  Balance Sheet to make the data for the supply of oil and the consumption of it balance out, which they label in their footnotes as “unaccounted for crude oil”…note that last week’s unaccounted for crude was +421,000, so this week’s unaccounted oil represents a swing of 1,046,000 barrels per day, and thus we can surmise that the week over week oil data is accordingly suspect…

US oil refineries were operating at 79.7% of their capacity in using those 14,472,000 barrels of crude per day, down from the 12 year high of 96.6% of capacity the prior week, and the lowest capacity utilization rate since the first week of February 2010….the 14,472,000 barrels of oil refined this week was the least oil refined in the US since April 19, 2013, 14.5% less than the 16,615,000 barrels of crude per day.that were being processed during week ending September 2nd, 2016, when refineries were operating at 93.7% of capacity, and roughly 7.5% below the 10 year average of 15.7 million barrels of crude being refined per day at this time of year…for a visual on how bad US refinery throughput was hit by Harvey, we’ll include a graph of that below…

Sept 8 2017 refinery throughput for Sept 2 (Harvey)

the above graph comes from a weekly emailed package of oil graphs from John Kemp, senior energy analyst and columnist with Reuters…the graph shows US refinery throughput in thousands of barrels per day by “day of the year” for the past ten years, with the past ten year range of our refinery throughput for any given date shown in the light blue shaded area, and the median of our refinery throughput, or the middle of the 10 year daily range, traced by the blue dashes over each day of the year….the graph also shows the number of barrels of oil refined for each week in 2016 traced weekly by a yellow line, with our year to date oil refining for 2017 represented in red…thus we can see that for most all of 2016, US oil refining was either at seasonal record highs or near the top of the average range, and that since April of this year, US oil refining had consistently beat the previous records by a large margin…however, oil refining for the week ending September 1st represents a drop of 18.3% from last week’s record, a shortfall we might expect to see continue for a least another week as flooded refineries gradually recover…

now, i know no one can look at that chart without asking what caused that obvious plunge to 11,500 gallons per day in the 10 year history…best i can determine that was the result of Hurricane Ike of 2008, which made landfall on Galveston Island on September 13 as a strong Category 2 hurricane, with a storm surge of over 15 feet from Galveston into southern Louisiana…Ike also knocked out power to most of the Houston area at the same time, so while it didn’t cause flooding, it certainly could have been responsible for a similar reduction of refining capacity in the week that it hit, which coincidentally marked the onset of the Global Financial Crisis and Great Recession…

with this week’s big hit to US oil refining, gasoline production from our refineries fell by 1,085,000 barrels per day from last week’s record to 9,517,000 barrels per day during the week ending September 1st, the lowest gasoline output since March….that left this week’s gasoline output at a level 6.4% lower than the 10,173,000 barrels of gasoline that were being produced daily during the comparable week a year ago….in addition, our refineries’ production of distillate fuels (diesel fuel and heat oil) fell by 563,000 barrels per day to 4,492,000 barrels per day at the same time, which was 10.7% less than the 5,031,000 barrels per day of distillates that were being produced during the week ending September 2nd last year….

with this week’s reduced gasoline production, our end of the week gasoline inventories fell by 3,199,000 barrels to 226,738,000 barrels by September 1st, the 9th decrease in gasoline inventories in 12 weeks…that was even as our domestic consumption of gasoline fell by 683,000 barrels per day to 9,163,000 barrels per day, the least since April, and as our imports of gasoline fell by 364,000 barrels per day to 475,000 barrels per day, and as our exports of gasoline fell by 418,000 barrels per day to 319,000 barrels per day…with significant gasoline supply withdrawals in 9 out of the last 12 weeks, our gasoline inventories are now half a percent below last September 2nd’s level of 227,793,000 barrels, while they are still 5.7% higher than the 214,547,000 barrels of gasoline we had stored on September 4th of 2015, and roughly 8% above the 10 year average of gasoline supplies for this time of the year

meanwhile, with the big decrease in our distillates production, our supplies of distillate fuels fell by 1,396,000 barrels to 147,767,000 barrels over the week ending September 1st, the first distillates inventory decrease in 4 weeks…that was as the amount of distillates supplied to US markets, a proxy for our domestic consumption, rose by 153,000 barrels per day to 4,063,000 barrels per day, while our exports of distillates fell by 384,000 barrels per day to 738,000 barrels per day and our imports of distillates rose by 26,000 barrels per day to 110,000 barrels per day…after this week’s decrease, our distillate inventories were 6.6% lower than the 158,135,000 barrels that we had stored on September 2nd, 2016, and 2.1% lower than the distillate inventories of 150,903,000 barrels of distillates that we had stored on September 4th of 2015, even as they remain more than 4% above the 10 year average for distillates stocks for this time of the year

finally, with the big drop in use of crude by our refineries, our commercial crude oil inventories rose for only the 3rd time in the past 22 weeks, increasing by 4,580,000 barrels to 457,773,000 barrels as of September 1st, an increase not even as large as the prior week’s decrease…however, while our oil inventories as of September 1st were 3.8% below the 480,725,000 barrels of oil we had stored on September 2nd of 2016, they were 8.5% higher than the 426,062,000 barrels in of oil that were in storage on September 4th of 2015, and up considerably from the normal level for our oil supplies in the years before the oil glut started building up, ie., 41.2% higher than the 327,428,000 barrels of oil we had in storage on September 5th of 2014… 

This Week’s Rig Count

US drilling activity increased for the 4th time in the past 11 weeks during the week ending September 8th, after a string of 23 consecutive weekly increases earlier this year, but the count still remains lower than during July and August….Baker Hughes reported that the total count of active rotary rigs running in the US rose by 1 rig to 944 rigs in the week ending Friday, which was 436 more rigs than the 508 rigs that were deployed as of the September 9th report in 2016, while it was still less than half of the recent high of 1929 drilling rigs that were in use on November 21st of 2014….

the number of rigs drilling for oil was down by 3 rigs to 756 rigs this week, which still left oil rigs up by 342 over the past year, while their count remained far from the recent high of 1609 rigs that were drilling for oil on October 10, 2014…at the same time, the count of drilling rigs targeting natural gas formations increased by 4 rigs to 187 rigs this week, which was 95 more rigs than the 92 natural gas rigs that were drilling a year ago, but still way down from the recent high of 1,606 natural gas rigs that were deployed on August 29th, 2008…in addition, one rig that was classified as miscellaneous was still drilling this week, compared to the 2 miscellaneous rigs that were working a year ago..

the Gulf of Mexico rig count was unchanged at 16 rigs this week, as was the total offshore count…in both cases, that was down from 18 offshore in the Gulf and in total a year ago…however, a platform was set up and began drilling operations on an inland lake in southern Louisiana this week, for an ‘inland waters’ count of 5 rigs, the same as a year ago…

working horizontal drilling rigs fell by 1 rig to 793 rigs this week, which left the horizontal rig count still up by 397 rigs from the 396 horizontal rigs that were in use in the US on September 9th of last year, while their count was also still down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014….at the same time, the directional rig count was down by 5 rigs to 76 rigs this week, which was still up from the 48 directional rigs that were deployed on September 9th of 2016…. on the other hand, the vertical rig count was up by 7 rigs to 75 vertical rigs this week, which was also up from the 64 vertical rigs that were deployed during the same week last year..

the details on this week’s changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes…the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows weekly and year over year rig count changes for the major US geological oil and gas basins…in both tables, the first column shows the active rig count as of September 8th, the second column shows the change in the number of working rigs between last week’s count (September 1st) and this week’s (September 8th) count, the third column shows last week’s September 1st active rig count, the 4th column shows the change between the number of rigs running on Friday and the equivalent Friday a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was for the 9th of September, 2016…     

September 8th 2017 rig count summary

other than the major producing states listed above, Alabama saw its rig count fall by a rig to 1 rig, which was also down from the 2 rigs active in Alabama in the same week last year, while Mississippi saw its rig count increase by 1 rig to 3 rigs, which was still down from the 4 rigs deployed in Mississippi on September 9th 2016..

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July’s trade deficit and factory inventories

this week’s regular monthly economic releases included the July report on our International Trade, the Full Report on Manufacturers’ Shipments, Inventories and Orders for July, and the July report on Wholesale Trade, Sales and Inventories, all from the Census Bureau, and the and the Consumer Credit Report for July from the Fed, which showed that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $18.5 billion, or at a 5.9% annual rate, as non-revolving credit expanded at a 6.9% rate to $2,759.3 billion and revolving credit outstanding rose at a 3.2% rate to $994.5 billion…the main privately issued report released this week was the August Non-Manufacturing Report On Business; which saw the NMI (non-manufacturing index) rise to 55.3% in August, up from 53.9% in July, indicating a larger plurality of service industry purchasing managers reported expansion in various facets of their business in August than in July….in addition, in a once a year report, the BLS released the Current Employment Statistics Preliminary Benchmark Revision, which estimated that 95,000 more payroll jobs were created in the year ending March 2017 than had been reported in the monthly Employment Situation reports we review monthly, more than half of which were in construction…however, this preliminary estimate will not yet affect jobs totals as they’re being reported the rest of this year; that will not happen until the final benchmark revision is published with the January 2018 employment report in February 2018….

July Trade Deficit Inches Up on Lower Exports of Cars and Consumer Goods

our trade deficit rose by 0.2% in July as the value of both our exports and imports decreased, but our exports decreased a bit more….the Census report on our international trade in goods and services for July indicated that our seasonally adjusted goods and services trade deficit increased by $0.1 billion to $43.7 billion in July from a revised June deficit of $43.6 billion…after rounding, the value of our July exports fell by $0.6 billion to $194.4 billion on a $0.4 billion decrease to $128.6 billion in our exports of goods and a $0.1 billion decrease to $65.8 billion in our exports of services, while our imports fell by $0.4 billion to $238.1 billion on a $0.5 billion decrease to $193.9 billion in our imports of goods while our imports of services rose $0.1 billion to $44.1 billion…export prices were on average 0.4% higher in July, so the relative change in real July exports would be lower than the nominal dollar amount by that percentage, while import prices were 0.1% higher, meaning that relative real imports were smaller than the nominal dollar values reported here by that small percentage…

the decrease in our July exports was due to lower exports of consumer goods and automotive products, which was partially offset by higher exports of capital goods….referencing the Full Release and Tables for July (pdf), in Exhibit 7 we find that our exports of consumer goods fell by $670 million to $15,747 million on a $457 million decrease in our exports of cell phones and a $241 million decrease in our exports of gem diamonds, and that our exports of automotive vehicles, parts, and engines fell by $597 million to $12,967 million on a $986 million decrease in our exports of new and used passenger cars…in addition, our exports of industrial supplies and materials fell by $192 million to $37,525 million on a $597 million decrease in our exports of nonmonetary gold, and our exports of other goods not categorized by end use fell by $286 million to $5,294 million…partially offsetting those decreases, our exports of capital goods rose by $961 million to $44,884 million on an increase of $1,092 million in our exports of civilian aircraft and a $304 million increase in our exports of civilian aircraft engines, while our exports of foods, feeds and beverages rose by $352 million to $12,185 million on a $150 million increase in our exports of soybeans…’

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our imports and shows that lower imports of automobiles and crude oil were responsible for the $0.4 billion drop in our goods imports, because our imports of capital goods rose at the same time…our imports of automotive vehicles, parts and engines fell by $827 million to $29,375 million on a $830 million decrease in our imports of passenger cars, and our imports of industrial supplies and materials fell by $714 million to $40,589 million, as our imports of crude oil fell by $948 million while our imports of iron and steel mill products fell by $336 million…at the same time, our imports of consumer goods fell by $2 million to $48,760 million because our imports of pharmaceuticals fell by $1,097 million, and our imports of other goods not categorized by end use fell by $360 million to $7,942 million…..partially offsetting the decreases in those categories, our imports of capital goods rose by $1272 million to $54,142 million on an increase of $569 million in our imports of computers and a $606 million increase in our imports of computer accessories, and our imports of foods, feeds, and beverages rose by $196 million to $11,651 million on a $101 million increase in our imports of meat…

to gauge the impact of July trade in goods on 3rd quarter GDP growth figures, we use exhibit 10 in the pdf for this report, which gives us monthly goods trade figures by end use category and in total, already adjusted in chained 2009 dollars, the same inflation adjustment used by the BEA to compute trade figures for GDP, albeit they are not annualized here….from that table, we can compute that 2nd quarter real exports of goods averaged 125,251 million monthly in 2009 dollars, while inflation adjusted July exports were at 126,385 million in the same 2009 dollar quantity index representation… annualizing the change between the two figures, we find that July’s real exports are running at a 3.7% annual rate above those of the 2nd quarter, or at a pace that would add about 0.30 percentage points to 3rd quarter GDP if continued through August and September…..in a similar manner, we find that our 2nd quarter real imports averaged 187,682 million monthly in chained 2009 dollars, while inflation adjusted July imports were at 187,985 million…that would indicate that so far in the 3rd quarter, we have seen a small increase at annual rate of a bit more than 0.6% in our real imports from those of the 2nd quarter…since imports subtract from GDP because they represent the portion of consumption or investment that occurred during the quarter that was not produced domestically, their increase at a 0.6% rate would subtract about 0.09 percentage points from 3rd quarter GDP….hence, if the July trade deficit is maintained throughout the 3rd quarter, our improving balance of trade in goods over that of the 2nd quarter would add about 0.21 percentage points to the growth of 2nd quarter GDP….note that we have not computed the impact of the less volatile change in services here because the Census does not provide inflation adjusted data on those, and we don’t have easy access to all their price changes…

Factory Shipments Up 0.3% in July, Factory Inventories Up 0.2%

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 $15.8 billion or 3.3 percent to $466.4 billion in July, following a increase of 3.2% in June, which was revised from the 3.0% increase reported 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 two weeks ago…in that respect, this report showed that new orders for manufactured durable goods decreased by $16.8 billion or 6.8 percent to $228.9 billion, virtually unchanged from the previously published decrease…

more importantly then, this report indicated that the seasonally adjusted value of July factory shipments rose for the seventh time in eight months, increasing by $1.6 billion or 0.3 percent to $474.3 billion, following a 0.1% increase in June…shipments of durable goods were up by $0.6 billion or 0.2 percent to $236.9 billion in July, revised from the previously published $1.0 billion, 0.4% increase, which followed a statistically insignificant decrease in June….meanwhile, the value of shipments (and hence of “new orders”) of non-durable goods rose by $1.0 billion or 0.4 percent to $237.4 billion, as a $0.9 billion or 2.2 percent increase to $41.3 billion in the value of shipments of petroleum and coal products accounted for most of the increase…

meanwhile, the aggregate value of July factory inventories rose for the eighth time in the past nine months, increasing by $1.4 billion or 0.2 percent to $651.6 billion, following a 0.3% increase in June….July inventories of durable goods increased in value by $1.3 billion or 0.3 percent to $398.7 billion, virtually unchanged from what was reported in the advance report two weeks ago….at the same time, the value of non-durable goods’ inventories increased $0.2 billion or 0.1 percent to $252.8 billion, on a $0.3 billion or 0.8 percent increase to $34.5 billion in the value of coal and petroleum inventories…

to gauge the effect of these July factory inventories on 1st quarter GDP, they must first be adjusted for changes in price with appropriate components of the producer price index…by stage of fabrication, the value of finished goods inventories rose by 0.2% to $227,793 million; the value of work in process inventories rose by 0.5% to $201,371 million, and materials and supplies inventories were valued 0.1% higher at $222,396 million…the July producer price index reported that prices for finished goods decreased 0.1%, prices for intermediate processed goods were also 0.1.% lower, while prices for unprocessed goods averaged 0.4% lower….assuming similar valuations for inventories, that would suggest that July’s real finished goods inventories were roughly 0.3% higher, real inventories of intermediate processed goods were 0.6% higher, and real raw material inventory inventories were 0.5% higher, all following a second quarter that saw total inventories virtually unchanged.. 

 

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

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graphics for September 9th

refinery throughput:

Sept 8 2017 refinery throughput for Sept 2 (Harvey)

rig count summary:

September 8th 2017 rig count summary

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