tables and graphs for July 21st

retail sales:

June 2018 retail sales table

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US gasoline output at a record high, oil supplies at a 41 mo. low; global oil output up in June after May revised lower

oil prices ended sharply lower this week, after hitting an air pocket and dropping more than 5% on Wednesday, on the back of the announcement of the resumption of Libyan oil output…after falling a half percent to $73.80 a barrel on an increase in US crude supplies last week, contracts for US light sweet crude for August delivery rose 5 cents to $73.85 a barrel on Monday, as reports that Canada’s Syncrude operations would resume activity sooner than expected cut off a rally higher….oil prices then rose 26 cents to $74.11 a barrel on Tuesday, on continued production outages globally, and expectations that sanctions against Iran would limit supplies…on Wednesday, however, oil prices collapsed, with US crude falling $3.73 to $70.38 a barrel, after Libya announced they had resumed exports, and the OPEC reported an increase in oil output; at the same time, North Sea Brent crude, the international benchmark, fell $5.46 to $73.33 per barrel, a daily price move more than three standard deviations from the mean, and the largest one-day drop since February 2016…while Brent crude rebounded $1.11 higher on Thursday, US oil prices were mostly mixed, slipping another 5 cents to $70.33 a barrel at the close, as the resumption of Libyan output offset warnings from the IEA that OPEC was facing a spare capacity crunch…US prices then climbed 68 cents to $71.01 on Friday, but still posted a sharp 3.8% loss for the week, as oil traders weighed returning Libyan supply and global trade disputes against indications of tighter crude supply and shrinking spare output capacity

natural gas prices also ended the week lower, dropping in four out of 5 trading sessions in sliding a total of 10.6 cents to $2.752 per mmBTU by the end of the week, despite forecasts for the return of hot weather and a smaller than expected injection of surplus gas into storage….the natural gas storage report for week ending July 6th from the EIA indicated that natural gas in storage in the US rose by 51 billion cubic feet to 2,203 billion cubic feet over the week, which left our gas supplies 725 billion cubic feet, or 24.8% below the 2,869 billion cubic feet that were in storage on July 7th of last year, and 519 billion cubic feet, or 19.1% below the five-year average of 2,722  billion cubic feet of natural gas that are typically in storage after the first week of July…the consensus forecast was for an addition of 56 billion cubic feet to gas in underground storage, so this 51 billion cubic feet increase was a bit below what had been expected, and quite a bit lower than the 77 billion cubic foot of weekly surplus natural gas that has typically been added to storage during the first week of July… since US natural gas supplies as July 6th were still 1,587 billion cubic feet below the 3,790 billion cubic feet we had stored after the first week of November last year, this week’s 51 billion cubic foot addition to supplies now means that we’ll need to add an average of 93 billion cubic feet per week over the next 17 weeks to get our gas supplies back to a normal level before the next heating season’s withdrawals begin…since that’s now unlikely, it means that if the upcoming winter is much colder than normal, then parts of the country will run out of natural gas in storage and shortages will occur before the winter is over…understand, there is no one responsible for seeing that we have adequate natural gas supplies going into the winter, and that US gas producers have a greater incentive to liquefy and export gas at three times the domestic price than to store it here, since any gas shortages that develop will only cause the price to rise, making their remaining gas output more profitable…

The Latest US Oil Data from the EIA

this week’s US oil data from the US Energy Information Administration, covering the week ending July 6th, indicated that due to a big drop in our oil imports, the week saw the largest withdrawal from our commercial crude supplies since 2016….our imports of crude oil fell from last week’s 16 month high by an average of 1,624,000 barrels per day to an average of 7,431,000 barrels per day, while our exports of crude oil fell by an average of 309,000 barrels per day to an average of 2,027,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 5,404,000 barrels of per day during the week ending July 6th, 1,315,000 barrels per day less than the net of our imports minus exports during the prior week…at the same time, field production of crude oil from US wells was again reported as unchanged at 10,900,000 barrels per day, which means that our daily supply of oil from our net imports and from wells totaled an average of 16,304,000 barrels per day during the reporting week… 

at the same time, US oil refineries were using 17,652,000 barrels of crude per day during the week ending July 6th, just 1,000 barrels per day less than they used during the prior week, while at the same time 1,805,000 barrels of oil per day were reportedly being pulled out of oil storage in the US….hence, this week’s crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was 457,000 more barrels per day than what refineries reported they used during the week….to account for that disparity, the EIA needed to insert a (-457,000) 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, essentially a fudge factor that is labeled in their footnotes as “unaccounted for crude oil”… (for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)… 

further details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports fell to an average of 8,271,000 barrels per day, which was still 5.9% more than the 7,811,000 barrel per day average we imported over the same four-week period last year….the 1,805,000 barrel per day drop in our total crude inventories was all withdrawn from our commercially available stocks of crude oil, as the amount of oil in our Strategic Petroleum Reserve was unchanged….this week’s crude oil production was reported as unchanged despite a 29,000 barrel per day increase in output from Alaska, because the EIA has recently decided to round the weekly oil production estimates to the nearest 100,000 barrels per day, to more closely reflect their inability to accurately model oil output from all the wells in the lower 48 states, and there was no change in the rounded total….US crude oil production for the week ending July 7th 2017 was reported at 9,397,000 barrels per day, so this week’s rounded oil production figure is roughly 16.0% above that of a year ago, and 29.3% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016…

US oil refineries were operating at 96.7% of their capacity in using 17,652,000 barrels of crude per day during the week ending July 6th, down from 97.1% of capacity the prior week, but still a refinery capacity utilization rate well above historical norms…the 17,652,000 barrels of oil that were refined this week were among the largest refinery throughput figures on record, topped only by the prior three weeks in June of this year, and the 17,725,000 barrels per day that were being refined during the last full week of August 2017….this week’s refinery throughput was also 2.4% higher than the 17,244,000 barrels of crude per day that were being processed during the week ending July 7th a year ago, when US refineries were operating at 94.5% of capacity….

even with the amount of oil being refined virtually unchanged this week, gasoline output from our refineries was much higher, rising by 388,000 barrels per day to a record high of 10,699,000 barrels per day during the week ending July 6th, after our refineries’ gasoline output had increased by 169,000 barrels per day during the week ending June 29th....with this week’s increase, our gasoline production during the week was 2.2% more than the 10,365,000 barrels of gasoline that were being produced daily during the week ending July 7th of last year…at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) fell by 21,000 barrels per day to 5,442,000 barrels per day, after rising by 67,000 barrels per day the prior week…however, this week’s distillates production was still at a seasonal high, and 1.7% higher than the 5,349,000 barrels of distillates per day that were being produced during the week ending July 7th, 2017…

with gasoline production at a record high, we’ll take a look at an historical graph of that production so we can see what’s going on there…

July 11 2018 gasoline production thru July 6h

the above is a screen copy of the interactive graph that accompanies the EIA spreadsheet for “Weekly U.S. Refiner and Blender Adjusted Net Production of Finished Motor Gasoline” which gives us the weekly totals in thousands of barrels per day of our total gasoline production from 1992 to the present, adjusted as indicated…it’s a poor graph, but you should be able to see that our gasoline production has been steadily rising over the entire span of this graph, thus repeatedly setting “new record highs” along the way during the summer and winter seasonal peaks of production…ie, the 10,699,000 barrels of gasoline that were produced per day during the week ending July 6th broke the previous record of 10,566,000 barrels per day that had been produced during the week ending August 18th, 2017, which in turn broke the record of 10,537,000 barrels per day set during the week ending December 23rd, 2016, which in turn broke the record of 10,456,000 barrels per day set six weeks earlier….the point being that as long as US refining continues to expand and gasoline production continues to increase, production records are going to be set along the way…so if it hadn’t been this week, more than likely we would have seen another gasoline production record sometime later this year…

however, even with our gasoline production at a record high, our supply of gasoline in storage at the end of the week still fell by 694,000 barrels to 238,997,000 barrels by July 6th, the eleventh decrease in 18 weeks, but just the 12th decrease in 35 weeks, as gasoline inventories, as usual, were being built up over the winter months….our supplies of gasoline fell because our exports of gasoline rose by 699,000 barrels per day to 1,186,000 barrels per day even as the amount of gasoline supplied to US markets fell by 594,000 barrels per day to 9,275,000 barrels per day, while our imports of gasoline rose by 205,000 barrels per day to 853,000 barrels per day….but even after this week’s decrease, our gasoline inventories were still 1.4% higher than last July 7th’s level of 235,656,000 barrels, and roughly 10.6% above the 10 year average of our gasoline supplies for this time of the year…    

meanwhile, with our distillates production little changed, our supplies of distillate fuels increased by 4,125,000 barrels to 117,557,000 barrels during the week ending July 6th, the largest jump in distillate inventories since the first week of this year…that was as our exports of distillates fell by 258,000 barrels per day to 1,152,000 barrels per day, after falling by 426,000 barrels per day the previous week, while our imports of distillates rose by 12,000 barrels per day to 104,000 barrels per day, and while the amount of distillates supplied to US markets, a proxy for our domestic consumption, fell by 321,000 barrels per day to 3,805,000 barrels per day, after increasing by 514,000 barrels per day the prior week…however, since this week’s big inventory increase comes after our distillate supplies had shrunk by 14,452,000 barrels over the six weeks to May 18th on the way to falling to a 13 year low, our distillate supplies for the week ending July 6th still remain 20.8% below the 153,553,000 barrels that we had stored on July 7th, 2017, and roughly 14.7% lower than the 10 year average of distillates stocks for this time of the year…   

finally, with that big drop in our oil imports coming while refineries were consuming oil at near record pace, the week saw the largest withdrawal of oil from our commercial supplies of crude oil since September 2016, as our commercial crude supplies fell by 12,633,000 barrels during the week, from 417,881,000 barrels on June 29th to 405,248,000 barrels on July 6th, which turns out to be the least amount of oil we’ve had in storage since February 20, 2015…and after falling 33 weeks over the past year, our oil inventories as of July 6th were 18.2% below the 495,350,000 barrels of oil we had stored on July 7th of 2017, 17.5% below the 491,172,000 barrels of oil that we had in storage on July 8th of 2016, and 5.6% below the 429,368,000 barrels of oil we had in storage on July 10th of 2015, when the US glut of oil had already risen above the nearly stable supply levels of under 400 million barrels during the prior years…  

OPEC’s Monthly Oil Market Report

with oil prices again responding to any changes in OPEC’s oil output, we’ll next take a look at OPEC’s July Oil Market Report (covering June OPEC & global oil data) next, which was released Wednesday of this week and is available as a free download, and hence it’s the report we check for monthly global oil supply and demand data…the first table from this monthly report that we’ll look at is from the page numbered 61 of that report (pdf page 71), 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 thus resolve any potential disputes that could arise if each member reported their own figures…    

June 2018 OPEC crude output via secondary sources

as we can see on this table of official oil production data, OPEC’s oil output increased by 173,400 barrels per day in May to 32,327,000 barrels per day, from their May production total of 32,154,000 barrels per day….that May figure was originally reported as 31,869,000 barrels per day before the addition of new member Congo, so the May output of the other OPEC members was therefore revised 34,000 barrels per day lower with this report (for your reference, here is the table of the official May OPEC output figures as reported a month ago, before this month’s revisions)…as you can tell from the far right column above, an increase of 405,400 barrels per day in the output from Saudi Arabia was main reason that the cartel’s output rose, as that increase more than offset the decrease of 254,300 barrels per day in Libyan output, the decrease of 88,300 barrels per day in Angolan output, and the decrease of 47,500 barrels per day in Venezuelan output…with an original output quota set at 10,060,000 barrels per day for the Saudis, their output is now well above their allocation, but with OPEC output excluding the Congo at 31,996,000 barrels per day, OPEC’s total oil output is still 734,000 barrels per day below the 32,730,000 barrels per day revised quota they agreed to at their November 2017 meeting, mostly on the big drop in Venezuelan output…

the next graphic we’ll include shows us both OPEC and world monthly oil production on the same graph, over the period from July 2016 to June 2018, and it comes from the page numbered 62 (pdf page 72) of the July OPEC Monthly Oil Market Report…on this graph, the cerulean 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…     

June 2018 OPEC report global oil supply

OPEC’s preliminary data indicates that total global oil production rose by a rounded 600,000 barrels per day to 98.01 million barrels per day in June, apparently after May’s global output total was revised down by 450,000 barrels per day from the 97.86 million barrels per day global oil output that was reported a month ago, as non-OPEC oil production rose by 430,000 barrels per day in June after that revision….global oil output for June was also 1.74 million barrels per day, or 1.5% higher than the 96.59 million barrels of oil per day that were being produced globally in June a year ago (see the July 2017 OPEC report online (pdf) for the year ago details)…after the downward revision to global output, OPEC’s June oil production of 32,327,000 barrels per day represented 33.0% of what was produced globally during the month, up from the 32.6% share reported for May, with the addition of Congo’s output also contributing to OPEC’s share increase…OPEC’s June 2017 production was at 32,611,000 barrels per day, which means that the 13 OPEC members who were part of OPEC last year, excluding new members Congo and Equatorial Guinea, are still producing 741,000 fewer barrels per day of oil than they were producing a year ago, during the sixth month that their production quotas were in effect, with the 598,000 barrel per day decrease in output from Venezuela from that time largely responsible for their output drop…

despite the 600,000 barrel per day increase in global oil output in June, the downward revisions to May output meant that we again saw a small deficit in the amount of oil being produced globally during the month, as this next table from the OPEC report will show us… 

June 2018 OPEC report 2018 global oil demand

the table above comes from page 32 of the July  OPEC Monthly Oil Market Report (pdf page 42), and it shows regional and total oil demand in millions of barrels per day for 2017 in the first column, and OPEC’s estimate of oil demand by region and globally quarterly over 2018 over the rest of the table…on the “Total world” line of the third column, we’ve circled in blue the figure that’s relevant for June, which is their revised estimate of global oil demand during the second quarter of 2018…     

OPEC’s estimate is that during the 2nd quarter of this year, all oil consuming regions of the globe have been using 98.04 million barrels of oil per day, which is a downward revision of a rounded 0.04 million barrels of oil per day from their prior estimate for the 2nd quarter, as we’ve circled in green….meanwhile, as OPEC showed us in the oil supply section of this report and the summary supply graph above, the world’s oil producers were producing 98.01 million barrels per day during June, which means that there was a small shortfall of around 30,000 barrels per day in global oil production vis-a vis the demand estimated for during the month… 

at the same time that 2nd quarter global demand was being revised a rounded 40,000 barrels per day lower, May’s global output total was revised down by 450,000 barrels per day to 97,410,000 barrels per day, so that means that the shortfall for May now works out to 630,000 barrels per day, revised from the 220,000 barrel per day shortfall we had figured on a month ago…the 2nd quarter revision to global demand also means that the global shortfall for April would be revised from the 480,000 barrels per day that we figured last month to 440,000 barrels per day…

however, as is also circled in green above, while global oil demand figures for the second quarter were revised lower, global oil demand figures for the first quarter of 2018 were revised 50,000 barrels per day higher, which means that our previously recomputed oil surplus for the first quarter of 2018 will have to be recomputed again…based on the revisions of a month ago, we had figured a global oil surplus of 180,000 barrels per day for March, a surplus of 360,000 barrels per day for February, and a surplus of 200,000 barrels per day for January…each of those surplus figures thus have to be revised lower based on revised higher demand, so hence our new figures will show a surplus of 130,000 barrels per day for March, a surplus of 310,000 barrels per day for February, and a surplus of 150,000 barrels per day for January…totaling it all up, that means that for the first six months of 2018, global oil demand exceeded production by 16,270,000 barrels, a relatively small oil shortfall that is the equivalent of roughly four hours of global oil production at the June rate…  

This Week’s Rig Count

US drilling activity increased for the second time in five weeks, but for 13th time in the past 16 weeks during the week ending July 13th, as the steady increase in drilling for oil we saw with higher oil prices the first half of this year has stalled over the past month…Baker Hughes reported that the total count of active rotary rigs running in the US increased by 2 rigs to 1054 rigs over the week ending on Friday, which was 102 more rigs than the 952 rigs that were in use as of the July 14th report of 2017, but was down from the recent high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC began their attempt to flood the global oil market… 

the count of rigs drilling for oil was unchanged at 863 rigs this week, which was 98 more oil rigs than were running a year ago, while it was still well below the recent high of 1609 rigs that were drilling for oil on October 10, 2014…at the same time, the number of drilling rigs targeting natural gas formations increased by 2 rigs to 189 rigs this week, which was also up by 2 from the 182 natural gas rigs that were drilling a year ago, but way down from the modern high of 1,606 natural gas rigs that were deployed on August 29th, 2008…in addition, there continues to be two rigs drilling this week that are considered to be “miscellaneous”, in contrast to no such “miscellaneous” rigs in use a year ago….

with a second platform starting operations off the coast of Texas, drilling activity in the Gulf of Mexico increased by 1 rig to 19 rigs this week, which was still 2 fewer than the 21 platforms that were deployed in the Gulf of Mexico a year ago…however, the drilling platform that had been deployed offshore from Alaska was shut down this week, so the total US offshore count remains at 19 rigs, down by 2 rigs from the total 21 offshore rigs that were drilling a year ago…however, there was also a platform that started drilling on an inland body of water in southern Louisiana this week, so there are now 5 such “inland waters” rigs operating, up from 3 on inland waters a year ago…

the count of active horizontal drilling rigs was unchanged a 930 horizontal rigs this week, which was still 126 more horizontal rigs than the 804 horizontal rigs that were in use in the US on July 14th of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014…meanwhile, the directional rig count increased by 1 rig to 68 directional rigs this week, which was still down from the 72 directional rigs that were in use during the same week of last year…in addition, the vertical rig count increased by 1 rig to 56 vertical rigs this week, which was still down from the 76 vertical rigs that were operating on July 14th of 2017…

the details on this week’s changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes…the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas basins…in both tables, the first column shows the active rig count as of July 13th, the second column shows the change in the number of working rigs between last week’s count (July 6th) and this week’s (July 13th) count, the third column shows last week’s July 6th active rig count, the 4th column shows the change between the number of rigs running on Friday and those of the equivalent weekend report of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was on Friday the 14th of July, 2017…      

July 13 2018 rig count summary

as you can see, there was not much variation in the rig counts across the states or the primary basins from a week ago…all the major basin changes seen above were oil rigs, as the two rig increase in natural gas drilling took place in basins not tracked separately by Baker Hughes, or more than likely would have been conventional rig start ups, as the rig on the inland waters platform likely was; as you can see, the major natural gas basins, including the Marcellus and the Utica, saw no change…

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June’s consumer & producer prices; May’s wholesale inventories & JOLTS

major reports released this past week included the June Consumer Price Index, the June Producer Price Index, the June Import-Export Price Index, and the Job Openings and Labor Turnover Survey (JOLTS) for May, all of which came from the Bureau of Labor Statistics, and the May report on Wholesale Trade, Sales and Inventories from the Census Bureau….the week also saw the Consumer Credit Report for May from the Fed, which indicated that overall consumer borrowing expanded by a seasonally adjusted $24.5 billion, or at a 7.6% annual rate, as non-revolving credit expanded at a 6.2% rate to $2,858.4 billion while revolving credit outstanding grew at a 11.4% rate to $1,039.3 billion, and the Mortgage Monitor for May (pdf) from Black Knight Financial Services, which indicated that 3.64% of all mortgages nationally were delinquent in May, down from 3.67% in April and down from 3.79% in May a year ago, and that 0.59% of all mortgages remained in the foreclosure process, down from 0.61% in April and down from 0.83% in foreclosure a year ago…

Consumer Prices Up 0.1% in June as Lower Utility Prices Weigh on Index

the consumer price index was 0.1% higher in June, as lower prices for energy services and apparel partially offset modestly higher priced gasoline, housing and medical care…the Consumer Price Index  Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices rose by 0.1% in June after rising  0.2% in May, 0.2% in April but after falling 0.1% in March, and after it had risen by 0.2% in February, 0.5% in January, 0.1% in December, 0.4% in November, 0.1% in October, 0.5% in September, 0.4% in August, and 0.1% last July….the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, rose from 251.588 in May to 251.989 in June, which left it statistically 2.872% higher than the 244.955 index reading in June of last year, which is reported as a 2.9% increase….with lower prices for energy services a major drag on overall prices, seasonally adjusted core prices, which exclude food and energy, rose by 0.2% for the month, with the unadjusted core price index rising from 257.469 to 257.697, which left the core index 2.255% ahead of its year ago reading of 252.014, which is reported as a 2.3% annual increase….

the volatile seasonally adjusted energy price index fell by 0.3% in June, after it had increased by 0.9% in May, by 1.4% in April, fallen by 2.8% in March, risen by 0.1% in February, 3.0% in January, fallen by 0.2% in December, risen by 3.2% in November and by 2.0% in October, and is thus now 12.0% higher than in June a year ago…prices for energy commodities were 0.6% higher in June, while the index for energy services fell by 1.5%, after falling 0.1% in May and 0.5% in April….the increase in the energy commodity index was underpinned by a 0.5% increase in the retail price of gasoline, the largest component, while the price of fuel oil rose 2.9%, and prices for other fuels, including propane, kerosene and firewood, fell by an average of 0.2%…with that increase, the energy commodities index is now 24.3% above its year ago levels, with gasoline prices also averaging 24.3% higher than they were a year ago…within energy services, the index for utility (piped) gas service fell 1.7% after falling by 0.6% in May, which left utility gas priced 2.1% lower than it was a year ago, while the electricity price index was 1.4% lower, after rising 0.1% in May…the energy services price index is now 0.6% lower than last June, as even electricity prices have decreased by 0.1% over the past year…

the seasonally adjusted food price index rose 0.2% in June, after being unchanged in May, rising 0.3% in April, 0.1% in March, being unchanged in February, rising 0.2% in January, 0.2% in December, being unchanged in October and November, rising 0.1% in September, 0.1% in August, 0.2% in July, and being unchanged last June, as the index for food purchased for use at home was 0.2% higher in June, while prices for food bought for eating away from home were also 0.2% higher, as prices at fast food outlets rose 0.2% and prices at full service restaurants rose 0.1%, while food prices at at employee sites and schools were up 1.1%…

in the food at home categories, the price index for cereals and bakery products rose 0.6% despite a 0.3% drop in bread prices, as prices for rice, pasta and cornmeal rose 1.3%, prices for crackers rose 2.4% and prices for cookies rose 4.3%…on the other hand, the price index for the meats, poultry, fish, and eggs group was down 0.6% after falling 0.7% in May, as egg prices fell 7.1% and the pork index was 1.1% lower….at the same time the index for dairy products was 0.7% higher on a 0.8% increase in the price of fresh whole milk and 1.4% higher cheese prices…in addition, the fruits and vegetables index was 0.5% higher on a 1.6% increase in the price index for fresh fruits and a 3.5% increase in prices for tomatoes….meanwhile, the beverages index was 0.3% higher, as coffee prices rose 0.3% and carbonated drink prices were priced 0.7% higher…lastly, the index for the ‘other foods at home’ category was up 0.1%, as prices for sweets other than candy and sugar rose 0.8% and the index for olives, pickles, and relishes rose 2.3%….among food at home line items, only prices for eggs, which are still up 14.1% since last June, have seen price increase greater than 10% over the past year, while no food item has fallen in price by more 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 June after rising by 0.2% in May, 0.1% in April, 0.1% in March, 0.2% in February, 0.3% in January, 0.3% in December, 0.1% in November, 0.2% in October, 0.1% in September, 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 unchanged in May, while the more heavily weighted composite for all services less energy services was 0.2% higher….among the goods components, which will be used by the Bureau of Economic Analysis to adjust June retail sales for inflation in national accounts data, the index for household furnishings and supplies fell by 0.2%, as the index for floor coverings fell 1.5%, prices for dishes and flatware fell 8.2%, and prices for cookware and tableware were 2.6% lower…at the same time, the apparel price index was 0.9% lower, as prices for women’s dresses fell 3.5% while the index for women’s underwear, nightwear, sportswear and accessories was 3.4% lower…on the other hand, prices for transportation commodities other than fuel were up 0.5%, as prices for new cars and trucks rose 0.4% and prices for used cars and trucks rose 0.7%…in addition, prices for medical care commodities were 0.2% higher on a 0.4% increase in the index for drug prices…however, the recreational commodities index fell 0.2% on 1.3% lower prices for audio equipment and 5.7% lower prices for photographic equipment and supplies, while the education and communication commodities index was 0.9% lower on a 1.3% decrease in prices for college textbooks and a 0.7% decrease in prices for personal computers…lastly, a separate price index for alcoholic beverages was up 0.5% on 0.8% higher beer at home, while the price index for ‘other goods’ was down 0.4% on a 3.3% decrease in the index for infant’s equipment…

within core services, the price index for shelter rose 0.1% on a 0.3% increase in rents, and a 0.3% increase in homeowner’s equivalent rent, increases which were partially offset by a 4.1% decrease in costs for lodging away from home at hotels and motels, while the sub-index for water, sewers and trash collection rose 0.4%, and other household operation costs were on average 0.3% higher….at the same time, the index for medical care services was up 0.5%, as hospital services rose 0.8%, and the transportation services index was up 0.2 as car and truck rentals rose 1.5% while vehicle maintenance and servicing rose 0.3%….meanwhile, the recreation services index rose 0.4% as film processing rose 0.5% and admissions to sporting events rose 2.9%….in addition, the index for education and communication services rose 0.3%, as internet and electronic information services rose 1.3%…lastly, the index for other personal services was up 0.3% as haircuts rose 0.8% and apparel services other than laundry and dry cleaning rose 0.7%…among core line items, prices for televisions, which are now 19.1% cheaper than a year ago, the price index for audio equipment, which has fallen 14.5% over the past year, the price index for toys, games, hobbies and playground equipment, which is down by 10.4% from a year ago, and the price index for clocks, lamps, and decorator items, which is now 12.2% lower than last June, have all seen prices fall by more than 10% over the past year, while only laundry equipment, prices for which have risen 13.1 over the past year, has seen prices rise by a double digit magnitude over that span…

Producer Prices Up 0.3% in June on Higher Margins for Trade Services

the seasonally adjusted Producer Price Index (PPI) for final demand was up 0.3 in June, as prices for finished wholesale goods increased 0.1%, while margins of final services providers increased by 0.4%…this followed a May report that indicated the PPI was up 0.5%, with prices for finished wholesale goods up 1.0%, while margins of final services providers increased by 0.3%, and an April report that indicated the PPI rose 0.1%, as prices for finished wholesale goods averaged no change, while margins of final services providers increased by 0.1% ….on an unadjusted basis, producer prices are now 3.4% higher than a year ago, up from the year over year increase of 3.1% that was indicated in last month’s report, and largest one year increase in the PPI since November 2011…meanwhile, the core producer price index, which excludes food, energy and trade services, was also up by 0.3% for the month, and is now 2.7% higher than in June a year ago…

as noted, the price index for final demand for goods, aka ‘finished goods’, was up 0.1% in June, after rising 1.0% in May, being unchanged in April, rising a revised 0.2% in March, and rising a revised 0.1% in February…the price index for wholesale energy was up 0.8% in June after rising 4.6% in May, 0.1% in April, falling 2.1% in March, and rising 0.1% in February and 2.9% in January, while the price index for wholesale foods fell 1.1%, and the index for final demand for core wholesale goods (ex food and energy) was 0.3% higher for the 6th month in a row….the largest wholesale energy price change was a 8.0% increase in wholesale prices for home heating oil, while wholesale prices for gasoline were 0.5% higher…the wholesale food price index, meanwhile, saw a 13.8% decrease in wholesale prices for fresh and dry vegetables and a 6.3% decrease in wholesale prices for oilseeds….among wholesale core goods, prices for commercial furniture increased 1.6%, while the index for trailers and campers moved up 0.9%…

at the same time, the index for final demand for services rose 0.4% in June, after rising 0.3% in May, 0.1% in April, 0.3% in March and a revised 0.2% in February, as the June index for final demand for trade services rose 0.7%, the index for final demand for transportation and warehousing services rose 0.5%, while the core index for final demand for services less trade, transportation, and warehousing services rose 0.3%….among trade services, seasonally adjusted margins for fuels and lubricants retailers rose 21.8% and margins for automobile and automobile parts retailers rose 4.5%… among transportation and warehousing services, margins for truck transportation of freight rose 1.3%…among the components of the core final demand for services index, the index for hospital outpatient care rose 1.0% while margins for tax preparation and planning services services rose 2.9%..

this report also showed the price index for intermediate processed goods was 0.7% higher in June, after rising 1.5% in May and 0.5% in April, falling 0.3% in March, but rising by 0.6% in February….the price index for intermediate energy goods rose 1.8%, as refinery prices for diesel fuel rose 6.4% and producer prices for LP gas rose 3.9%, while prices for intermediate processed foods and feeds fell 1.1%, as the index for processed poultry fell 4.0%…meanwhile, the core price index for processed goods for intermediate demand less food and energy was 0.7% higher on a 2.4% increase in the index for basic organic chemicals and a 4.0% increase in mill prices for softwood lumber, which are now up 23.2% from a year ago, after 20% tariffs were imposed on Canadian imports….prices for intermediate processed goods are now 6.8% higher than in June a year ago, now the 19th 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 1.0% in June, after rising 2.5% in May, 0.9% in April, falling a revised 4.5% in March, and rising a revised 1.7% in February….that was as the price index for crude energy goods fell 2.1% as crude oil prices fell 9.5%, while the index for unprocessed foodstuffs and feedstuffs rose 0.2%, as producer prices for corn fell 7.5% and prices for oilseeds fell 6.3%…at the same time, the index for core raw materials other than food and energy materials was 0.2% lower, as prices for iron and steel scrap fell 1.8% and prices for nonferrous metal ores fell 1.0%…this raw materials index is now up by 5.8% from a year ago, the same year over year increase that we saw in June a year ago…

lastly, the price index for services for intermediate demand rose 0.1% in June, after rising 0.3% in May, 0.3% in April, 0.3% in March and a revised 0.3% in February…the index for trade services for intermediate demand was up 0.1%, as margins for intermediate hardware, building material, and supplies retailers rose 2.4% and margins for chemicals and allied products wholesalers fell 1.5%…the index for transportation and warehousing services for intermediate demand rose 0.2%, as the index for truck transportation of freight rose 1.3%…meanwhile, the core price index for services less trade, transportation, and warehousing for intermediate demand was unchanged, as the index for business loans (partial) rose 2.6% while the index for nonresidential real estate rents fell 2.4%….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 2.9% higher than it was a year ago… 

Job Openings and Firings Down in May, Hiring and Quitting at Record Highs

the Job Openings and Labor Turnover Survey (JOLTS) report for May from the Bureau of Labor Statistics estimated that seasonally adjusted job openings fell by 202,000, from 6,840,000 in April to 6,638,000 in May, after April’s record job openings were revised 142,000 higher, from 6,698,000 to 6,840,000…May jobs openings were still 16.7% higher than the 5,688,000 job openings reported in May a year ago, as the job opening ratio expressed as a percentage of the employed fell from 4.4% in April to 4.3% in May, while it was still up from 3.7% in May a year ago…the greatest drop in May job openings was in professional and business services, where openings fell by 64,000 to 1,190,000, while job openings in government rose by 25,000 to 602,000 (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 May, seasonally adjusted new hires totaled a record high of 5,754,000, up by 173,000 from the revised 5,581,000 who were hired or rehired in April, as the hiring rate as a percentage of all employed was rose from 3.8% to 3.9%, and was also up from the hiring rate of 3.7% in May a year earlier (details of hiring by industry since January are in table 2)….meanwhile, total separations also rose, by 44,000, from 5,424,000 in April to 5,468,000 in May, while the separations rate as a percentage of the employed remained at 3.7%, while it was up from the separations rate of 3.6% in May a year ago (see table 3)…subtracting the 5,468,000 total separations from the total hires of 5,754,000 would imply an increase of 286,000 jobs in May, somewhat more than the revised payroll job increase of 244,000 for May reported by the June establishment survey last week, but still not an unusual difference and within the expected +/-115,000 margin of error in these incomplete samplings

breaking down the seasonally adjusted job separations, the BLS reports that a record 3,561,000 of us voluntarily quit their jobs in May, up by 212,000 from the revised 3,340,000 who quit their jobs in April, while the quits rate, widely watched as an indicator of worker confidence, rose from 2.3% to 2.4% of total employment, which was also up from 2.2% a year earlier (see details in table 4)….in addition to those who quit, another 1,588,000 were either laid off, fired or otherwise discharged in May, down by 143,000 from the revised 1,731,000 who were discharged in April, as the discharges rate fell from 1.2% to 1.1% of all those who were employed during the month, and was also down from 1.2% a year earlier….meanwhile, other separations, which includes retirements and deaths, were at 320,000 in May, down from 344,000 in April, for an ‘other separations’ rate of 0.2%, same as in April and in May a year ago….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

May Wholesale Sales Up 2.5%, Wholesale Inventories Up 0.6% in Hit to 2Q GDP

the May report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $509.0 billion, up 2.5 percent (+/-0.4%) from the revised April level, and up 11.8 percent (±3.3 percent) from the wholesale sales of May 2017… the April preliminary estimate was revised from the $493.3 billion reported a month ago to $496.4 billion…May’s wholesale sales increase was the largest since March 2011 and was driven by an 8.3% increase in the value of oil and petroleum products, which was at least partially price related…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 any goods left on the shelf or in intermediate storage represent goods that were produced but not sold, and this May report estimated that wholesale inventories were valued at a seasonally adjusted $633.5 billion at month end, an increase of 0.6 percent (+/-0.2%)* from the revised April level and 5.9 percent (±3.7 percent) higher than in May a year ago, with the April preliminary estimate revised from $630.2 billion to $629.865 billion at the same time, still a 0.1% increase from March…for national accounts purposes, May wholesale inventories will be adjusted for price changes by category with the appropriate components of the May producer price index, which indicated a 1.0% increase in prices for finished goods, a 1.5% increase in prices for intermediate goods, and a 2.5% increase in prices for unprocessed goods….therefore the modest 0.6% increase in the value of May inventories appears to indicate a real decrease of wholesale inventories so far in the 2nd quarter, which will be a major negative when compared to the $23.7 billion increase in real wholesale inventories that was indicated by the key source data and assumptions (xls) in the 3rd estimate of 1st quarter GDP…

 

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

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tables and graphs for July 14

rig count summary:

July 13 2018 rig count summary

gasoline production:

July 11 2018 gasoline production thru July 6h

distillates production:

July 11 2018 distillates production thru July 6h

OPEC oil output:’

June 2018 OPEC crude output via secondary sources

global oil output:

June 2018 OPEC report global oil supply

global oil demand:

June 2018 OPEC report 2018 global oil demand

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US LNG exports to quadruple in 2 years, use more than half of current gas output if all proposed plants are completed

US oil prices fell for the first time in 3 weeks this week, mostly on news of a surprise increase in US oil inventories, while international prices fell even more, mostly on news of higher global oil output…after rising 8% to $74.15 a barrel last week on US Iran policy and an interruption of Canadian supplies, US crude for August delivery fell 21 cents to $73.94 a barrel on Monday, on news of higher oil output from Saudi Arabia and Russia and concern over the global trade war launched by the US…for those same reasons, the international benchmark Brent crude ended $1.93 lower to $77.30 a barrel, as its late May $11 price premium over US crude has eroded over the past month on higher than expected output from OPEC….US crude prices then rocketed to as high as $75.27 a barrel at the open on Tuesday as oil output from Libya was cut off, but rolled over and fell sharply in mid-morning trading to a low of $72.73 a barrel, before steadying in the afternoon and ending with gain of 20 cents a $74.14 a barrel on the day, while Brent closed 46 cents higher at $77.76 at the same time…after the holiday, US oil prices were rising again on Thursday morning, reaching $74.96 a barrel, before falling steadily in the afternoon to end the day $1.20 lower at $72.94 a barrel, after the delayed EIA oil data unexpectedly revealed the first increase in US crude supplies in a month…US benchmark prices rallied on Friday, however, rising 86 cents to $73.80 a barrel, when data showed that oil inventories at Cushing OK, the delivery point for pricing U.S. crude, fell to their lowest in 3-1/2 years, largely due to an outage at the Syncrude facility in Canada that’s expected to last for a month…at the same time, Brent crude, the international benchmark slipped 28 cents on rising OPEC production to close the week at $77.11 a barrel, thus ending the week only $4.31 a barrel above the US price…

natural gas prices also ended the week lower, initially dropping 6.2 cents to $2.862 per mmBTU on Monday, on data showing record natural gas production, and on expectations for more seasonal weather later in the month, and then ending the week fractionally lower at $2.858 per mmBTU, after the EIA storage report showed a supply increase on the higher side of average estimates….the natural gas storage report for week ending June 29th from the EIA indicated that natural gas in storage in the US rose by 78 billion cubic feet to 2,152 billion cubic feet over the week, which left our gas supplies 717 billion cubic feet, or 25.0% below the 2,869 billion cubic feet that were in storage on June 30th of last year, and 493 billion cubic feet, or 18.6% below the five-year average of 2,645 billion cubic feet of natural gas that are typically in storage after the last week of June…the consensus forecast was for an addition of 75 billion cubic feet to gas in underground storage, so this 78 billion cubic feet increase was fairly close to the consensus, but somewhat higher than the 70 billion cubic foot of weekly surplus natural gas that is typically added to storage at this time of year…however, since natural gas supplies as of end of June were still 1,638 billion cubic feet below the 3,790 billion cubic feet we had stored after the first week of November last year, this week’s 78 billion cubic foot addition to supplies was still short of the 91 billion cubic feet per week we need to see weekly over the next 18 weeks to get our gas supplies back to a normal level before the next heating season’s withdrawals begin…

a few graphics from two different reports on natural gas that were out this week will help put us our natural gas supply situation into perspective…

July 7 2018 first half natural gas supply and demand changes

this first graph is from the EIA’s natural gas weekly for this week, and was part of this week’s feature on natural gas supply and consumption for the first half of 2018, in which they cite data from PointLogic Energy, a natural gas analytical unit of IHS…the blue bar graph shows the change, in billions of cubic feet per day, in US consumption of natural gas between the first half of 2017 and the first half of 2018, while the green bar graph shows the change, in billions of cubic feet per day, in US supply of natural gas between the first half of 2017 and the first half of 2018…according to the accompanying data, total natural gas consumption averaged 87.4 billion cubic feet per day (Bcf/d) in the continental US during the first half of 2018, which was 8.4 Bcf/d (11%) greater than during the first half of 2017….that 8.4 billion cubic feet per day additional demand this year is what’s graphed in blue, and we can see that most of the new gas consumption has been increased residential and commercial use, for electric generation, and for LNG exports…at the same time, US supplies of natural gas averaged 84.8 billion cubic feet per day during the first half of 2018, a 7.8 Bcf/d (10%) year-on-year increase….that 7.8 billion cubic feet per day of new supply is what’s graphed in green, and as you can see, most of it is increased dry gas output from wells, with a small increase of imports from Canada…

what we should take away from that graphic is that US demand for natural gas at 87.4 billion cubic feet per day was greater than our supply at 84.8 billion cubic feet per day, (hence leading to the 25% year over year drop of natural gas in underground storage) and that demand for natural gas has been growing faster than new production is..

at the same time the EIA was publishing that analysis of natural gas supply and demand, S&P Global Platts was issuing a new special report titled Insurgent shale: prospects and perils for US LNG exports (pdf)…suffice it to say that their new report did not consider where new supplies of natural gas would come from, but was largely concerned with the potential for a bottleneck at the Panama Canal if we tried to push all of our proposed natural gas exports through the isthmus at once…while we’re not worried about the potential for a gas tanker traffic jam at the Panama Canal, there were some graphics in that report that should raise our concern…the first is a map and table showing US LNG export plants that have been approved, some of which are under construction or already shipping LNG overseas..

July 5 2018 LNG plants operating and approved

the above map and legend are from page 6 of that Platts report, and show the US LNG facilities that are operating, that are under construction, and those that are approved for construction, but have not yet seen ground broken, and the expected gas processing capacity for each…at the top of the list are the two LNG liquefaction plants that are currently operating and exporting LNG: Sabine Pass on the LA-Texas border, with a listed output of 1.40 billion cubic feet per day, and Cove Point Maryland, with a listed output of .82 billion cubic feet per day…note that since Cove Point just began exporting a few months ago, most of its output doesn’t even show up in the blue bar for increased LNG exports on the EIA bar graph above…according to Platts, we’re currently exporting 2.22 billion cubic feet per day of natural gas in the form of LNG (and more gas exports are also piped to Mexico)

meanwhile, the second grouping on the above list shows the LNG production facilities currently under construction, including another 0.7 billion cubic feet per day at Sabine Pass, 2.10 billion cubic feet per day at Hackberry, Louisiana, 2.14 billion cubic feet per day of liquefaction capacity at Freeport, Texas, 2.14 of capacity at Corpus Christi, and .35 billion cubic feet per day at Elba Island Georgia…together, those plants under construction will represent another 7.43 billion cubic feet per day of natural gas export capacity, some of which will be coming online within a year, and all of which will be completed within two years…that means that by mid-2020, we will be exporting 9.65 billion cubic feet per day of natural gas in the form of LNG, more than quadruple what we are now exporting…recall that during the first half of 2018, our supplies of natural gas from wells and Canadian imports were running at 84.8 billion cubic feet per day, so that means our expected LNG exports will amount to more than 11% of current production by mid-2020…most of these exports are under long term contracts, so they will be supplied first; US consumers who happen to need natural gas for heating on a cold day in the middle of winter will wait in line for whatever gas remains…

in addition, as you can see at the bottom of the table, there are 4 more additional LNG plants that have been approved but are not yet under construction; two at Lake Charles, Louisiana, with a combined draw of 3.28 billion cubic feet per day from our natural gas supplies, another at Hackberry, Louisiana, with a capacity of 1.41 billion cubic feet per day of gas, and another 2.10 billion cubic feet per day at Sabine Pass, on the Texas side of the border…

and that’s just the beginning of what this industry thinks they can do, because there are an additional 16 applications still pending or in pre-filing for LNG export plants, with a combined liquefaction capacity of 28.17 billion cubic feet of natural gas per day, as the map and table below from that Platts report shows:

July 5 2018 LNG plants proposed

should all of these plants be approved and constructed, the total export capacity of all 27 plants shown on the two graphics above would amount to 44.61 billion cubic feet of natural gas per day, if my off top of my head arithmetic is correct…that’s more than half our present daily production, and should we merely continue to use natural gas domestically at today’s pace, it would imply an increase in demand for natural gas of over 50%, far exceeding the most optimistic forecasts for future US natural gas production that i’ve ever seen…in fact, even Platt’s own forecast for natural gas output that accompany this report only indicates a ~23% increase in US natural gas production by 2023, so it appears that the analysts at Platts, like the rest of the industry, have so thoroughly bought into their own hype that they can’t even put two and two together anymore, publishing an inherent contradiction right there in their own data…

The Latest US Oil Data from the EIA

this week’s US oil data from the US Energy Information Administration, covering the week ending June 29th, indicated that due to a big jump in our oil imports and a refinery pullback from the prior week’s record throughput, we had a surplus of oil to add to our commercial crude supplies for the twelfth time in the past twenty-three weeks….our imports of crude oil rose by an average of 699,000 barrels per day to an average of 9,055,000 barrels per day, a 16 month high, while our exports of crude oil fell by an average of 664,000 barrels per day to an average of 2,336,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 6,719,000 barrels of per day during the week ending June 29th, 1,363,000 barrels per day more than the net of our imports minus exports during the prior week…at the same time, field production of crude oil from US wells was reported as unchanged at 10,900,000 barrels per day, which means that our daily supply of oil from our net imports and from wells totaled an average of 17,619,000 barrels per day during the reporting week…

at the same time, US oil refineries were using 17,653,000 barrels of crude per day during the week ending June 29th, 163,000 barrels per day less than they used during the prior week, while at the same time 178,000 barrels of oil per day were reportedly being added to oil storage in the US….hence, this week’s crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports and from oilfield production was 212,000 fewer barrels per day than what was added to storage plus what refineries reported they used during the week…to account for that disparity, the EIA needed to insert a (-212,000) 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, essentially a fudge factor that is labeled in their footnotes as “unaccounted for crude oil”… (for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)…

further details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports rose to an average of 8,438,000 barrels per day, which was 6.6% more than the 7,915,000 barrel per day average we imported over the same four-week period last year….the 178,000 barrel per day increase in our total crude inventories was all added to our commercially available stocks of crude oil, as the amount of oil in our Strategic Petroleum Reserve was unchanged….this week’s crude oil production was reported as unchanged despite a 45,000 barrel per day decrease in output from Alaska, because the EIA has recently decided to round the weekly oil production estimates to the nearest 100,000 barrels per day, to more closely reflect their inability to accurately model oil output from all the wells in the lower 48 states, and there was no change in the rounded total….US crude oil production for the week ending June 30 2017 was reported at 9,338,000 barrels per day, so this week’s rounded oil production figure is roughly 16.7% above that of a year ago, and 29.3% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016…

meanwhile, US oil refineries were operating at 97.1% of their capacity in using 17,653,000 barrels of crude per day during the week ending June 29th, down from the 17 year high of 97.5% of capacity the prior week, but still a refinery capacity utilization figure higher than any seen in recent yearsthe 17,653,000 barrels of oil that were refined this week were likewise among the largest refinery throughput figures on record, topped only by the prior two weeks in June and the 17,725,000 barrels per day that were being refined during the last full week of August 2017….this week’s refinery throughput was also 3.0% higher than the 17,141,000 barrels of crude per day that were being processed during the week ending June 30th a year ago, when US refineries were operating at 93.6% of capacity….

even with the reduction in amount of oil being refined this week, gasoline output from our refineries was somewhat higher, rising by 169,000 barrels per day to 10,311,000 barrels per day during the week ending June 29th, after our refineries’ gasoline output had increased by 43,000 barrels per day during the week ending June 22nd....but even with this week’s increase, our gasoline production during the week was still fractionally less than the 10,365,000 barrels of gasoline that were being produced daily during the week ending June 30th of last year…at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) rose by 67,000  barrels per day to 5,463,000 barrels per day, after falling by 72,000 barrels per day the prior week…however, this week’s distillates production was still 7.1% higher than the 5,100,000 barrels of distillates per day that were being produced during the week ending June 30th, 2017…

even with the increase in our gasoline production, our supply of gasoline in storage at the end of the week fell by 1,505,000 barrels to 239,691,000 barrels by June 29th, the tenth decrease in 17 weeks, but just the 11th decrease in 34 weeks, as gasoline inventories, as usual, were being built up over the winter months….our supplies of gasoline fell because the amount of gasoline supplied to US markets rose by 138,000 barrels per day to 9,869,000 barrels per day, while our imports of gasoline fell by 340,000 barrels per day to 648,000 barrels per day, and while our exports of gasoline fell by 126,000 barrels per day to 487,000 barrels per day….but even after this week’s decrease, our gasoline inventories still finished the week at a seasonal high for this time of year, 1.0% higher than last June 30th’s level of 240,972,000 barrels, as they remain almost 11.6% above the 10 year average of our gasoline supplies for this time of the year…   

meanwhile, with the increase in distillates production, our supplies of distillate fuels increased by 134,000 barrels to 117,557,000 barrels during the week ending June 29th, the fifth small increase in six weeks…that was as our exports of distillates fell by 426,000 barrels per day from last week’s record to 1,410,000 barrels per day, while our imports of distillates rose by 38,000 barrels per day to 92,000 barrels per day and while the amount of distillates supplied to US markets, a proxy for our domestic consumption, rose by 514,000 barrels per day to 4,126,000 barrels per day, after decreasing by 692,000 barrels per day the prior two weeks…however, since this week’s small inventory increase comes after our distillate supplies had shrunk by 14,452,000 barrels over the six weeks to May 18th, our distillate supplies for the week ending June 29th still remain 21.8% below the 150,422,000 barrels that we had stored on June 30th, 2017, and roughly 16% lower than the 10 year average of distillates stocks for this time of the year…  

finally, with our oil imports at a 16 month high and our oil production continuing at a near record pace, our commercial supplies of crude oil increased for the 13th time in 2018 and for the 19th time in the past year, as our commercial crude supplies rose by 1,245,000 barrels during the week, from 416,636,000 barrels on June 22nd to 417,881,000 barrels on June 29th…however, after falling most of the past year, our oil inventories as of June 29th were still 16.9% below the 502,914,000 barrels of oil we had stored on June 30th of 2017, 15.4% below the 493,718,000 barrels of oil that we had in storage on July 1st of 2016, and 3.7% below the 433,714,000 barrels of oil we had in storage on July 3rd of 2015, when the US glut of oil was already well above the nearly stable supply levels of under 400 million barrels of the prior years… 

This Week’s Rig Count

US drilling activity increased for the first time in four weeks, but for 12th time in the last 15 weeks during the week ending July 6th, as drilling for oil widened after two weeks of contraction…Baker Hughes reported that the total count of active rotary rigs running in the US increased by 5 rigs to 1052 rigs over the week ending on Friday, which was 100 more rigs than the 952 rigs that were in use as of the July 7th report of 2017, but was down from the recent high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC began their attempt to flood the global oil market…

the count of rigs drilling for oil was up by 5 rigs to 863 rigs this week, which was also 100 more oil rigs than were running a year ago, while it was still well below the recent high of 1609 rigs that were drilling for oil on October 10, 2014…at the same time, the number of drilling rigs targeting natural gas formations was unchanged at 187 rigs this week, which down by 2 from the 189 natural gas rigs that were drilling a year ago, and way down from the modern high of 1,606 natural gas rigs that were deployed on August 29th, 2008…in addition, there continues to be two rigs operating that are considered to be “miscellaneous”, in contrast to no such “miscellaneous” rigs in use a year ago….

drilling activity in the Gulf of Mexico was unchanged at 18 rigs this week, which was 3 fewer than the 21 platforms that were deployed in the Gulf of Mexico a year ago…there was also a drilling platform deployed offshore from Alaska this week, so the total US offshore count of 19 rigs is now down by 2 rigs from the total 21 offshore rigs that were drilling a year ago, when there was no drilling being done off of the Alaskan coast….

the count of active horizontal drilling rigs was also up for the first time in four weeks, increasing by 4 rigs to 930 horizontal rigs this week, which was also 126 more horizontal rigs than the 804 horizontal rigs that were in use in the US on July 7th of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014…in addition, the directional rig count increased by 2 rigs to 67 directional rigs this week, which was still down from the 74 directional rigs that were in use during the same week of last year…on the other hand, the vertical rig count decreased by 1 rig to 55 vertical rigs this week, which was also down from the 74 vertical rigs that were operating on July 7th of 2017…

the details on this week’s changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes…the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas basins…in both tables, the first column shows the active rig count as of July 7th, the second column shows the change in the number of working rigs between last week’s count (June 29th) and this week’s (July 7th) count, the third column shows last week’s June 29th active rig count, the 4th column shows the change between the number of rigs running on Friday and those of the equivalent weekend report of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was on Friday the 7th of July, 2017…      

July 6 2018 rig count summary

a lot of activity is missing from this summary table this week, as we can see just by adding the totals…for instance, since we know there was an increase of 4 horizontal rigs, the net decrease of 4 rigs drilling in the major basins shown above means that 8 horizontal rigs were added elsewhere, outside of the purview of the Baker Hughes summaries…most of those were likely in outlying areas of Oklahoma’s Anadarko basin, since the state saw a one rig increase while the Cana Woodford saw a 6 rig decrease and another rig was pulled out of the Ardmore Woodford…others could have been in states not listed above; for instance, Indiana, Alabama and Mississippi each saw one rig added this week, after Alabama and Mississippi had both seen 2 rigs shut down last week…Indiana now has two rigs operating for the first time since January 2015, and Alabama has just that one rig operating at this time, down from the 3 rigs running in Alabama a year ago, while Mississippi now has 3 rigs operating in the state, the same number of rigs that were running in Mississippi a year ago…

although the Utica shows no change in net activity, that masks the switch of one of the 23 gas rigs that were operating in the formation last week to oil targeted drilling…natural gas rigs, meanwhile, ended unchanged, as the reduction of gas rigs in the Utica and Louisiana’s Haynesville was offset by increases in gas rigs elsewhere, in the Anadarko or other formations not tracked separately by Baker Hughes..

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June’s jobs report; May’s trade deficit, construction spending and factory inventories..

in addition to the Employment Situation Summary for June from the Bureau of Labor Statistics, this week’s major economic releases included three May reports that will input into 2nd quarter GDP:  the BEA report on our International Trade for May, and the May report on Construction Spending, and the Full Report on Manufacturers’ Shipments, Inventories and Orders for May, both from the Census Bureau….privately issued reports released this week included the ADP Employment Report for June, the light vehicle sales report for June from Wards Automotive, which estimated that vehicles sold at a 17.38 seasonally adjusted annual rate in June, up from the 16.81 million rate in May, and up from the 16.41 annual rate in June of 2017, and both of the widely followed purchasing manager’s surveys from the Institute for Supply Management (ISM): the June Manufacturing Report On Business indicated that the manufacturing PMI (Purchasing Managers Index) rose to 60.2% in June, up from 58.7% in May, which suggests a stronger expansion in manufacturing firms nationally, and the June Non-Manufacturing Report On Business; which saw the NMI (non-manufacturing index) rise to 59.1%, up from 58.6% in May, indicating a larger plurality of service industry purchasing managers reported expansion in various facets of their business in June…both of those ISM reports are easy to read and include anecdotal comments from purchasing managers from the 34 business types who participate in those surveys nationally… 

Employers Add 213,000 Jobs in June, Unemployment Rate Rises 0.2% as More Look for Work

the Employment Situation Summary for June indicated payroll job growth a bit above the average, while the unemployment rate rose because hundreds of previously uncounted individuals began to seek work…seasonally adjusted estimates extrapolated from the establishment survey data projected that employers added 213,000 jobs in June, after the payroll job increase for May was revised up from 223,000 jobs to 244,000, and the April increase was revised up from 159,000 jobs to 175,000, which means that the combined number of jobs created over those two months was 37,000 more than was previously reported….the unadjusted data shows that there were actually 646,000 more payroll jobs extant in June than in May, as large seasonal job increases that are typical for sectors such as construction, trade and transportation, and leisure and hospitality were normalized by the seasonal adjustments…

seasonally adjusted job increases were spread through throughout government and the private goods producing and service sectors, while only the retail sector saw a seasonally adjusted loss of 21,600 jobs, on a decrease of 21,500 workers in general merchandise stores…the broad professional and business services sector added 50,000 jobs, as 9,300 more workers found work with temporary help services and 8,100 more were employed by services to buildings and dwellings….manufacturing industries added another 36,000 workers in June, with the addition of 12,000 jobs in the auto industry…meanwhile, employment in health care and social assistance rose by 34,700, with the addition of 10,600 jobs in hospitals and 6,800 in individual and family services….the leisure and hospitality sector added a seasonally adjusted 25,000 jobs, with the addition of 16,400 more jobs in bars and restaurants…in addition, the transportation and warehousing sector added 15,400 employees, led by an increase of 4,300 in ground passenger transportation services…also, after a downward seasonal adjustment of 147,000, the construction sector still saw 13,000 more jobs than normal, as heavy and civil engineering construction firms hired 6,100 more than worked in May….meanwhile, the other major sectors, including wholesale trade, information, financial activities, private education, and government all saw smaller increases in payroll employment over the month…

the establishment survey also showed that average hourly pay for all employees rose by 5 cents to $26.98 an hour, after it had increased by a revised 7 cents an hour in May; at the same time, the average hourly earnings of production and non-supervisory employees increased by 4 cents to $22.62 an hour…employers also reported that the average workweek for all private payroll employees was unchanged at 34.5 hours, while hours for production and non-supervisory personnel were also unchanged at 33.8 hours…meanwhile, the manufacturing workweek rose by 0.1 hour to 40.9 hours, while factory overtime rose by 0.1 hour to 3.5 hours..

Meanwhile, the seasonally adjusted extrapolation from the June household survey estimated that the count of those employed rose by an estimated 102,000 to 155,576,000, while the similarly estimated number of those unemployed rose by 499,000 to 6,564,000; which together meant that June saw a net increase of 601,000 in the total labor force…since the working age population had grown by 188,000 over the same period, that meant the number of employment aged individuals who were not in the labor force fell by 413,000 to 95,502,000….the big increase of those in the labor force was enough to raise the labor force participation rate by 0.2% to 62.9%….on the other hand, the increase in number employed vis-a-vis the increase in the population was not great enough to increase the employment to population ratio, which we could think of as an employment rate, as it remained unchanged at 60.4%…however, the increase in the number counted as unemployed was large enough to raise the unemployment rate from 3.8% to 4.0%….at the same time, even though the number who reported they were involuntarily working part time fell by 205,000 to 4,743,000 in June, the alternative measure of unemployment, U-6, which includes those “employed part time for economic reasons”, still rose from 7.6% in May to 7.8% in June, as 38,000 more reported “slack work or business conditions” than in May..

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

May Trade Deficit Down 6.6% on Higher Exports of Soybeans and Aircraft

our trade deficit decreased by 6.6% in May as the value of both our exports and our imports increased, but our exports increased by a greater amount….the Commerce Department report on our international trade in goods and services for May indicated that our seasonally adjusted goods and services international trade deficit fell by $3.0 billion to $43.1 billion in May, from a April deficit of $46.08 billion, which was revised down from the $46.2 billion deficit reported last month…the value of our May exports rose by $4.1 billion to $215.3 billion on a $3.7 billion increase to $144.9 billion in our exports of goods and a $0.4 billion increase to $70.4 billion in our exports of services, while our imports rose $1.1 billion to $258.4 billion on a rounded-up $1.1 billion increase to $210.7 billion in our imports of goods while our imports of services slipped $0.1 billion to $47.7 billion…export prices were on average 0.6% higher in May, so the real growth in exports for the month was less than the nominal dollar growth by that percentage, while import prices were also 0.6% higher, meaning real imports would be reduced from the nominal dollar values reported here by that percentage…

the increase in our May exports can mostly be accounted for by higher exports of capital goods and of foods, feeds, and beverages, which were partially offset by a decrease in exports of industrial supplies and materials….referencing the Full Release and Tables for May (pdf), in Exhibit 7 we find that our exports of capital goods rose by $2,032 million to $48,158 million on an increase of $1,892 million in our exports of civilian aircraft and an increase of $761 million in our exports of engines for civilian aircraft, and that our exports of foods, feeds and beverages rose by $1737 million to $14,097 million on a $1,956 million increase in our exports of soybeans….in addition, our exports of consumer goods rose by $580 million to $17,795 million on a $487 million increase in our exports of pharmaceuticals and a $300 million increase in our exports of jewelry, and our exports of other goods not categorized by end use rose by $888 million to $6,179 million….partially offsetting those increases, our exports of industrial supplies and materials fell by $1288 million to $44,368 million on a $907 million decrease in exports of petroleum products other than fuel oil and a $719 decrease in our exports of non-monetary gold, and our exports of automotive vehicles, parts, and engines fell by $362 million to $13,558 million on a $334 million decrease in our exports of trucks, buses, and special purpose vehicles…

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our goods imports and shows that higher imports of capital goods was the major reason for the May increase in our imports…our imports of capital goods rose by $2,057 million to $58,980 million on increases of $648 million in our imports of telecommunications equipment, $410 million in our imports of computers, $251 million in our imports of parts for civilian aircraft, and $248 million in our imports of civilian aircraft engines…in addition, our imports of foods, feeds, and beverages rose by $105 million to $12,378 million….partially offsetting the increases in those two categories, our imports of consumer goods fell by $468 million to $51,423 million on a $613 million decrease in our imports of pharmaceuticals and a $303 million decrease in our imports of artwork and antiques, our imports of automotive vehicles, parts and engines fell by $301 million to $29,728 million on a $257 million decrease in our imports of parts and accessories other than chassis, engines and tires, and a $238 million decrease in our imports of automotive engines and engine parts, and our imports of other goods not categorized by end use fell by $412 million to $8,560 million, while our imports of industrial supplies and materials fell by $21 million to $47,853 million, as our imports of crude oil fell by $685 million while our imports of fuel oil rose by $496 million..

to gauge the impact of April and May’s international trade on 2nd quarter domestic 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, with the only difference being that they are not annualized in this report….from that table, we can compute that 1st quarter real exports of goods averaged 146,834.3 million monthly in 2009 dollars, while inflation adjusted April and May exports were at 150,636 million and 153,240 million respectively in the same 2009 dollar quantity index representation…then, annualizing the change between the first quarter average and the April – May average, we find that the 2nd quarter’s real goods exports are running at a 14.6% annual rate above those of the 1st quarter, or at a pace that would add about 1.20 percentage points to 2nd quarter GDP if maintained through June…..in a similar manner, we find that our 1st quarter real imports averaged 229,287.3 million monthly in chained 2009 dollars, while inflation adjusted April and May imports were at 228,116 million and 228,523 million in those same inflation adjusted dollars respectively….that would mean that so far in the 2nd quarter, our real imports of goods have decreased at a 1.68% annual rate from those of the 1st 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 decrease at a 1.68% rate would conversely add another 0.21 percentage points to 2nd quarter GDP….hence, if our goods trade deficit at the April – May level is maintained through June, our improving balance of trade in goods would add about 1.41 percentage points to the growth of 2nd quarter GDP….note that we have not attempted to compute the impact of the less volatile change in services here because the Commerce Department does not provide inflation adjusted data on that trade, but that there was also a notable increase in our services surplus in May that will likely have an impact as well…

Construction Spending Rises 0.4% in May after April Spending Revised 0.4% Lower

the Census Bureau report on construction spending for May (pdf) estimated that May’s seasonally adjusted construction spending would work out to $1,309.5 billion annually if extrapolated over an entire year, which was 0.4 percent (±1.3 percent)* above the revised annualized estimate of $1,304.5 billion of construction spending in April and 4.5 percent (±1.6 percent) above the estimated annualized level of construction spending in May of last year…the April spending estimate was revised 0.45% lower, from $1,310.4 billion to $1,304.5 billion, while the annual rate of construction spending for March was revised higher, from $1,286.8 billion to $1,293.5 billion, and the annual rate of February construction spending was revised down from $1,309.2 billion to a $1,305.5 billion rate…combined, the net $3.0 billion upward revision to annualized February and March construction spending would suggest that 1st quarter GDP, which was released last week, will be revised about 0.07 percentage points higher when annual revisions to GDP are released in late July…construction spending tor the first 5 months of 2018 has now amounted to $497.06 billion, 4.3 percent (±1.3 percent) above the $476.66 billion in construction spending for the same 5 months of 2017…

Further details on different subsets of construction spending are provided by the Census release summary:

  • Private Construction: Spending on private construction was at a seasonally adjusted annual rate of $1,005.4 billion, 0.3 percent (±0.8 percent)* above the revised April estimate of $1,002.3 billion. Residential construction was at a seasonally adjusted annual rate of $553.8 billion in May, 0.8 percent (±1.3 percent)* above the revised April estimate of $549.3 billion. Nonresidential construction was at a seasonally adjusted annual rate of $451.5 billion in May, 0.3 percent (±0.8 percent)* below the revised April estimate of $453.0 billion.
  • Public Construction: In May, the estimated seasonally adjusted annual rate of public construction spending was $304.1 billion, 0.7 percent (±2.6 percent)* above the revised April estimate of $302.1 billion. Educational construction was at a seasonally adjusted annual rate of $74.3 billion, 0.9 percent (±2.5 percent)* above the revised April estimate of $73.6 billion. Highway construction was at a seasonally adjusted annual rate of $94.6 billion, 0.2 percent (±8.1 percent)* below the revised April estimate of $94.8 billion.”

this construction spending report is used as source data for 3 subcomponents of GDP; investment in private non-residential structures, investment in residential structures, and government investment outlays, for both state and local and Federal governments…. however, gauging the impact of revised April and May construction spending as reported here on GDP is difficult because all figures given in this report are in nominal dollars and as you know, data used to compute the change in GDP must be adjusted for changes in price…accurately adjusting construction for price changes is no easy matter, either, because the National Income and Product Accounts Handbook, Chapter 6 (pdf), lists a multitude of privately published deflators that are used by the BEA for the various components of non-residential investment, such as the Engineering News Record construction cost index for utilities construction….in lieu of trying to find and adjust for all of those obscure price indices, we’ve opted to just use the producer price index for final demand construction as an inexact shortcut to make the price adjustment needed to make an estimate..,that index showed that aggregate construction costs were unchanged in May, after being up 1.1% from March to April, up 0.2% from February to March, and unchanged from January to February..

on that basis, we can estimate that May construction costs were roughly 1.1% greater than those of March, 1.3% greater than those of February and 1.3% greater than those of January, and obviously roughly the same as those of April…we then use those percentages to inflate spending for each of the months of the first quarter, which is arithmetically the same as deflating April and May construction spending vis-a vis the 1st quarter for comparison purposes, and then compare the inflation adjusted average of the 1st quarter months to the inflation adjusted average of the 2nd quarter months…annualized construction spending in millions of dollars for the five months in question is given as 1,309,490 for May, 1,304,455 for April, 1,293,125 for March, 1,305,527 for February, and 1,276,260 for January….thus to figure the growth of  May’s nominal construction spending figure of $1,309,490 and April’s figure of $1,304,455 over that of inflation adjusted figures of the first quarter, our calculation becomes (((1,309,490 + 1,304,455) / 2) / (((1,293,125 * 1.011) + (1,305,527 * 1.013) + (1,276,260 * 1.013)) / 3)) ^ 4 = .998184, which means that after adjusting for inflation, construction spending has been shrinking at a 0.18% annual rate over the first 2 months of the second quarterthat’s a contraction at a $594 million annual rate, which means that if June shows no improvement, that relatively tiny contraction in construction would subtract a net of about 0.01 percentage point from 2nd quarter GDP across those components that it influences…

Factory Shipments Up 0.6% May, Factory Inventories Up 0.2% in Big Hit to GDP

the May Full Report on Manufacturers’ Shipments, Inventories, & Orders (pdf) from the Census Bureau reported that the seasonally adjusted value of new orders for manufactured goods increased by $1.8 billion or 0.4 percent to $498.2 billion in May, following a decrease of 0.4% to $496.4 billion in April, which was revised from the 0.8% decrease to $494.4 billion 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 May advance report on durable goods we reported on last week…on those revisions, the Census Bureau’s 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 May, up three of the last four months, increased $1.8 billion or 0.4 percent to $498.2 billion, the U.S. Census Bureau reported today. This followed a 0.4 percent April decrease. Shipments, up twelve of the last thirteen months, increased $2.8 billion or 0.6 percent to $496.1 billion. This followed a 0.1 percent April increase. Unfilled orders, up six of the last seven months, increased $6.2 billion or 0.5 percent to $1,160.8 billion. This followed a 0.6 percent April increase. The unfilled orders-to-shipments ratio was 6.68, down from 6.73 in April. Inventories, up nineteen consecutive months, increased $1.3 billion or 0.2 percent to $668.4 billion. This followed a 0.4 percent April increase. The inventories-to-shipments ratio was 1.35, unchanged from April.
  • New Orders: New orders for manufactured durable goods in May, down two consecutive months, decreased $0.9 billion or 0.4 percent to $249.2 billion, up from the previously published 0.6 percent decrease. This followed a 1.0 percent April decrease. Transportation equipment, also down two consecutive months, drove the decrease, $0.9 billion or 1.1 percent to $86.1 billion. New orders for manufactured nondurable goods increased $2.7 billion or 1.1 percent to $249.0 billion.
  • Shipments: Shipments of manufactured durable goods in May, up nine of the last ten months, increased $0.1 billion or virtually unchanged to $247.1 billion, up from the previously published 0.1 percent decrease. This followed a virtually unchanged April decrease. Machinery, up three of the last four months, drove the increase, $0.2 billion or 0.7 percent to $32.4 billion. Shipments of manufactured nondurable goods, up eleven of the last twelve months, increased $2.7 billion or 1.1 percent to $249.0 billion. This followed a 0.3 percent April increase. Petroleum and coal products, up ten of the last eleven months, led the increase, $1.8 billion or 3.4 percent to $55.5 billion.
  • Unfilled Orders: Unfilled orders for manufactured durable goods in May, up six of the last seven months, increased $6.2 billion or 0.5 percent to $1,160.8 billion, unchanged from the previously published increase. This followed a 0.6 percent April increase. Transportation equipment, also up six of the last seven months, led the increase, $3.9 billion or 0.5 percent to $800.2 billion.
  • Inventories: Inventories of manufactured durable goods in May, up eighteen of the last nineteen months, increased $1.3 billion or 0.3 percent to $403.3 billion, unchanged from the previously published increase. This followed a 0.4 percent April increase. Transportation equipment, up five of the last six months, led the increase, $0.5 billion or 0.4 percent to $129.0 billion. Inventories of manufactured nondurable goods, up eleven consecutive months, increased less than $0.1 billion or virtually unchanged to $265.1 billion. This followed a 0.4 percent April increase. Chemical products, up seven of the last eight months, drove the increase, $0.1 billion or 0.1 percent to $87.9 billion..

to estimate the effect of those May factory inventories on 2nd 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 0.1% to $233,967 million; the value of work in process inventories rose 0.2% to $206,668 million, and materials and supplies inventories were valued 0.3% higher at $227,800 million…the May producer price index reported that prices for finished goods were on average 1.0% higher, that prices for intermediate processed goods were 1.5% higher, while prices for unprocessed goods averaged 2.5% higher….assuming similar valuations for like types of inventories, that would suggest that May’s real finished goods inventories were about 0.9% smaller, that real inventories of intermediate processed goods were 1.3% lower, and real raw material inventory inventories were about 2.2% lower…so even though real NIPA factory inventories were a bit smaller in the 1st quarter, this report seems to indicate a much larger real decrease in May, following a small decrease in April, suggesting that the real change in May factory inventories will have a significant negative impact on the growth rate of 2nd quarter GDP…

 

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

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tables and graphs for July 7th

rig count summary:

July 6 2018 rig count summary

natural gas supply and demand:

July 7 2018 first half natural gas supply and demand changes

gas exports, approved and under construction:

July 5 2018 LNG plants operating and approved

gas exports, proposed:

July 5 2018 LNG plants proposed

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