US oil supplies the lowest since March 1984; SPR at 43½ year low; highest Autumn refinery utilization rate since 1998

Strategic Petroleum Reserve at the lowest level since it was being filled in November 1982; total of all US oil inventories, including SPR, are the lowest since March 30th, 1984; US refinery utilization rate is highest for this time of year since 1998

US oil prices managed to increase for a sixth time in seven weeks after drone damage to Saudi Arabia’s East-West pipeline led to a suspension of their exports through the Red Sea…after rising 9.4% to $100.05 a barrel last week after the US “destroyed” at least eight Iranian oil tankers in the Persian Gulf and Gulf of Oman, Iran fired advanced missiles at U.S. warships, and Houthi attacks on Saudi oil facilities forced them to shut down, the contract price for the benchmark US light sweet crude for October delivery jumped more than $3 per barrel as the market opened in Asia on Monday following more strikes on Saudi Arabia and ships in the Persian Gulf on Sunday. and were later up more than 4% on global markets after Arab states in the Gulf called off a meeting with Iran planned for Monday, while Yemen’s Iran-backed Houthis launched a new attack on Saudi Arabia, further jeopardizing global oil supplies. and similarly jumped Monday morning in New York after ​a drone strikes on Friday forced shut Saudi Arabia’s East-West pipeline, which had been transporting 4 million bpd of crude oil to export terminals at the Red Sea, bypassing Iran’s blockade of the Strait of Hormuz, but pulled back ​from ​that four month high to settle $1.34 higher at $101.39 a barrel, as the market weighed the widening conflict in the Middle East against the possibility of a diplomatic resolution​, after President Trump stated that Iran wanted to reach a deal with the U.S…oil prices continued to rally early in Asian trading on Tuesday, as the Iran-aligned Houthis in Yemen expanded their control over the west coast of the Red Sea, while the attacks on a key Saudi onshore oil pipeline triggered concerns about additional disruptions to the already severely disrupted oil supply from the Middle East, but retreated from session highs while remaining above the prior session’s close during morning trading in New York, as escalating Houthi offensive actions in Saudi Arabia continued to command a formidable geopolitical risk premium across energy markets, then bounced off their morning low to settle $4.44 higher at $105.83 per barrel on the news that oil loadings at Saudi Arabia’s Red Sea port of Yanbu had been suspended following the shut in of its East-West Pipeline….oil prices fell on as markets opened in Asia on Wednesday after data from the American Petroleum Institute​ (API) showed that US crude oil, gasoline and distillate inventories all unexpectedly rose last week, and continued to trade lower across global markets after Saudi Arabia began offering additional crude exports through Oman, easing some fears that Saudi exports might fall more sharply, and held those losses in early US trading even after the EIA reported US crude inventories fell a bit for a 3rd week in a row, drastically different from the 7.1​ million barrel build that the API ​had reported, then tumbled to settle $3.40 lower at $102.43 a barrel on the first Fed interest rate hike in three years​, and on reports that Saudi Arabia could restore half of its East-West pipeline capacity ​d​amaged by militia attacks within days …oil prices fell more than 1% in early Asian trading on Thursday, largely on reports that Saudi Arabia was offering additional crude shipments through Oman, easing concerns over potential supply disruptions in the Middle East. and were down more than 3% across global markets, as concerns over immediate supply disruptions in the Middle East eased, and continued to retreat Thursday morning in New York on easing supply concerns amid reports of Saudi Arabia establishing workarounds to the recent supply disruption from the Red Sea, but later bounced off its low and retraced its earlier losses to trade back towards its high, ahead of settling 52 cents lower at $101.91 a barrel as reports of additional Saudi crude cargoes leaving Oman’s Sohar port eased supply concerns….oil prices fell for a third consecutive day in Asia on Friday amid Saudi Arabia’s efforts to resume exports after the “East-West” oil pipeline was damaged, but were mixed in early US trading as reports that the Saudi East-West pipeline could soon restart at half capacity weighed on prices​, while reports that Saudi Aramco would suspend term contracts to Europe next month dampened those bearish effects, but settled $1.61 lower at $100.30 a barrel after China, acting on a request from Saudi Arabia, asked Iran to limit attacks by Houthi rebels on Saudi oil infrastructure that had threatened a second oil export route from the Middle ‌East, but still managed to eke out a 0.2% gain on the week…

meanwhile, natural gas prices finished higher for the fifth time in six weeks on an increase in LNG demand and on forecasts for warmer than normal forecasts through early October…after falling 4.8% to $2.831 per mmBTU last week as traders shifted their focus to the Autumn “shoulder season”, when little demand for either cooling or heating w​a​s expected, the price of the benchmark natural gas contract for October delivery opened 4.1 cents higher on Monday, then rebounded from an early intraday low, as cooling demand in the South and sustained LNG demand provided support, and continued rising to settle 6.5 cents higher at $2.896 per mmBTU​, as hotter weekend forecasts pushed September cooling demand to within striking distance of the all-time record, while near-record production and an approaching late month cooldown capped gains…the Octob​e​r natural gas contract opened 4.4 cents higher on Tuesday and rose to an intraday high of $2.952 ahead of 10:00 AM, as traders continued to appr​e​ciate strong cooling and LNG demand against stout storage levels and impending should-month weather, and hung on to settle 2.3 cents higher at $2.919 per mmBTU as record-challenging heat across the South propped up demand, even as softer LNG feedgas and a bearish shift in forecasts beyond the weekend kept the rally in check….natural gas prices opened 4.0 cents higher on Wednesday and hit an intraday high of $2.968 within minutes of the opening bell, then backed off as bearish shoulder season sentiment proved to be dominant, and settled 2.8 cents lower at $2.891 per mmBTU as fading shoulder season demand weighed on the nearby contracts despite a final burst of late-summer heat….the October contract opened slightly lower on Thursday, but quickly rose to trade near $2.940 ahead of the weekly storage report, and peaked at an intraday high of $2.959 as the bullish-leaning storage report hit the wire, but then faded to settle 1.0 cent higher at $2.901 per mmBTU after a smaller-than-expected government storage injection reinforced signs that the US inventory cushion is tightening….natural gas futures reversed sharply higher early Friday, erasing a slide driven by cooler late-September forecasts. as LNG feedgas demand rebounded on Cameron LNG’s return, but became rangebound at midday as ebbing weather demand countered LNG momentum​, before settling 1.1 cents higher at $2.912 per mmBTU, as bullish forecasts for more demand next week and an increase in daily flows to LNG export plants offset a bearish increase in output and ample amounts of gas in storage, and thus finished 2.9% higher for the week..

The EIA’s natural gas storage report for the week ending September 11th indicated that the amount of working natural gas held in underground storage rose by 44 billion cubic feet to 3,298 billion cubic feet by the end of the week, which left our natural gas supplies 122 billion cubic feet, or 3.6% below the 3,420 billion cubic feet of gas that were in storage on September 11th of last year, but 118 billion cubic feet, or 3.7% above the five-year average of 3,180 billion cubic feet of natural gas that had typically been in working storage as of the 11th of September over the most recent five years….the 44 billion cubic foot injection into natural gas storage for the cited week was a little less than the 47 billion cubic foot injection into storage that the market had been expecting ahead of the report, ​a​nd it was much less than the 87 billion cubic foot of gas that were injected into natural gas storage during the corresponding week of 2025, and also less than the average 74 billion cubic foot injection into natural gas storage that had been typical for the first week in September over the past five years…

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending September 11th showed that even after an increase in our oil imports and decrease in our oil refining, a big jump in our oil exports meant we still had to pull oil out of our stored crude supplies for the twentieth time in twenty-one weeks, and for the 42nd time in sixty-eight weeks, despite an increase in the domestic supply of oil the EIA could not account for…. Our imports of crude oil rose by an average of 234,000 barrels per day to 7,058,000 barrels per day, after rising by an average of 53,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 1,414,000 barrels per day to average 4,831,000 barrels per day, which, when used to offset our imports, meant that the net of our trade of oil worked out to an import average of 2,227,000 barrels of oil per day during the week ending September 11th, an average of 1,180,000 fewer barrels per day than the net of our imports minus our exports during the prior week… At the same time, transfers to our oil supplies from Alaskan gas liquids, from natural gasoline, from condensate, and from unfinished oils were 454,000 barrels per day lower than the prior week at 433,000 barrels per day, while during the same week, production of crude from US wells was 3,000 barrels per day lower at 13,944,000 barrels per day.  Hence, our daily supply of oil from the net of our international trade in oil, from transfers, and from domestic well production appears to have averaged a total of 16,604,000 barrels per day during the September 11th reporting week…

Meanwhile, US oil refineries reported they were processing an average of 17,330,000 barrels of crude per day during the week ending September 11th, an average of 256,000 fewer barrels per day than the amount of oil that our refineries reported they were processing during the prior week, while over the same period, the EIA’s surveys indicated that a total of 149,000 barrels of oil per day were being pulled from the supplies of oil stored in the US… So, based on that reported & estimated data, the crude oil figures provided by the EIA appear to indicate that our total working supply of oil from storage, from net imports, from transfers, and from oilfield production during the week ending September 11th averaged a rounded 577,000 fewer barrels per day than what our oil refineries reported they used during the week.  To account for the difference between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a [ +577,000 ] barrel per day figure onto line 16 of the weekly U.S. Petroleum Balance Sheet, in order to make the reported data for the supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus indicating there must have been a error or omission of that amount in the week’s oil supply & demand figures that we have just transcribed…. Moreover, since 888,000 barrels per day of demand for could not be accounted for in the prior week’s EIA data, that means there was a 1,465,000 barrel per day difference between this week’s oil balance sheet error and the EIA’s crude oil balance sheet error from a week ago, and hence the changes to supply and demand from that week to this one that are indicated by this week’s report are somehow off by that much, and therefore are complete nonsense….However, since most oil traders react to the figures in these weekly EIA reports as if they were gospel, and since these weekly figures therefore often drive oil pricing and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it’s published, and just as it’s watched & believed to be reasonably reliable by most everyone in the industry…(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil supply, see this EIA explainer….also see this March 2023 twitter thread from an EIA administrator addressing these ongoing weekly errors, and what they had once hoped to do about it).

This week’s rounded 149,000 barrel per day average decrease in our overall crude oil inventories came as an average of 91,000 barrels per day were being pulled out of our commercial stocks of crude oil, while 58,000 barrels per day were being pulled out of our Strategic Petroleum Reserve, the twenty-fifth consecutive Iran war related withdrawal from the SPR, but the smallest yet, which left the SPR level at 284,957,000 barrels, the lowest since it was initially being filled in November 1982….with both commercial oil and the SPR both down again this week, that left the Total of all US Oil Supplies at 708,386,000 barrels, down 18.6% from 870,774,000 barrels on April 17th, and the lowest since March 30th, 1984….

Further details from the weekly Petroleum Status Report (pdf) indicated that the 4 week average of our oil imports rose to 6,703,000 barrels per day last week, which was 7.5% more than the 6,235,000 barrel per day average that we were importing over the same four-week period last year, while the four week average of our exports rose to 4,131,000 barrels per day last week, which was 5.1% more than the 3,929,000 barrel per day average that we were exporting last year year at this time… This week’s crude oil production was reported to be 3,000 barrels per day lower at 13,944,000 barrels per day as the EIA’s estimate of the output from wells in the lower 48 states was 9000 barrels per day lower at 13,481,000 barrels per day, while Alaska’s oil production was 6,000 barrels per day higher at 463,000 barrels per day…US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was 6.4% higher than that of our pre-pandemic production peak, and was also 43.8% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021.

US oil refineries were operating at 96.8% of their capacity while processing those 17,330,000 barrels of crude per day during the week ending September 11th, down from 97.8% the prior week, but still the highest September refinery utilization rate since 1998….the 17,330,000 barrels of oil per day that were refined that week were 5.5% more than the 16,424,000 barrels of crude that were being processed daily during the week ending September 12th of 2025, and 3.7% more than the 16,707,000 barrels that were being refined during the pre-pandemic week ending September 13th, 2019, when our refinery utilization rate was at 91.2%, which was a bit below the pre-pandemic normal utilization rate for this time of year…

Even with the decrease in the amount of oil that was being refined this week, gasoline output from our refineries was somewhat higher, increasing by 336,000 barrels per day to 9,644,000 barrels per day during the week ending September 11th, after our refineries’ gasoline output had decreased by 587,000 barrels per day during the prior week… This week’s gasoline production was 2.5% more than the​ 9​,407,000 barrels of gasoline that were being produced daily over the week ending September 12th of last year, and 2.0% more than the gasoline production of 9,451,000 barrels per day seen during the prepandemic week ending September 13th, 2019….on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 121,000 barrels per day to 5,227,000 barrels per day, after our distillates output had increased by 222,000 barrels per day during the prior week.  Even after that production decrease, our distillates output was 5.5% more than the 4,955,000 barrels of distillates that were being produced daily during the week ending September 12th of 2025, and 2.3% more than the 5,109,000 barrels of distillates that were being produced daily during the pre-pandemic week ending September 13th, 2019….

With this week’s increase in our gasoline production, our supplies of gasoline in storage at the end of the week rose for the seventh time in thirty-one weeks, increasing by 794,000 barrels to 207,732,000 barrels during the week ending September 11th, after our gasoline inventories had increased by 1,269,000 barrels to a 42 week low during the prior week.  Our gasoline supplies rose by less this week because the amount of gasoline supplied to US users rose by 247,000 barrels per day to 8,798,000 barrels per day, and because our exports of gasoline rose by 83,000 barrels per day to 955,000 barrels per day while our imports of gasoline rose by 73,000 barrels per day to 537,000 barrels per day,… But after fifty-four gasoline inventory withdrawals over the past eighty-two weeks, our gasoline supplies were 4.6% lower than last September 12th’s gasoline inventories of 217,650,000 barrels, and about 5% below the five year average of our gasoline supplies for this time of year…

After this week’s decrease in distillates production, our supplies of distillates rose for the eighteenth time in thirty-one weeks, increasing by 1,585,000 barrels to 107,859,000 barrels during the week ending September 11th, after our distillates supplies had increased by 2,087,000 barrels during the prior week… Our distillates supplies rose again this week as the amount of distillates supplied to US markets, an indicator of domestic demand, fell by 177,000 barrels per day to 3,501,000 barrels per day, and even as our exports of distillates rose 58,000 barrels per day to 1,614,000 barrels per day, while our imports of distillates fell by 71,000 barrels per day to 114,000 barrels per day… After 28 withdrawals from distillates inventories over the past 61 weeks, our distillates supplies at the end of the week were 13.5% lower than the  124,684,000 barrels of distillates that we had in storage on September 12th of 2025, and were about 13% below the five year average of our distillates inventories for this time of the year…

Finally, after the jump in our oil exports, our commercial supplies of crude oil in storage fell for the 15th time in twenty-six weeks, and for the 26th time over the past year, decreasing by 640,000 barrels over the week, from 424,069,000 barrels on September 4th to 423,429,000 barrels on September 11th, after our commercial crude supplies had decreased by 391,000 barrels over the prior week….After this week’s decrease, our commercial crude oil inventories were about 1% above recent five-year average of commercial oil supplies for this time of year, while they were still about 28% above the average of our available crude oil stocks as of the second weekend of September over the 5 years at the beginning of the past decade, with the difference between those comparisons arising because it wasn’t until early 2015 that our oil inventories had first topped 400 million barrels. After our commercial crude oil inventories had jumped to record highs during the Covid lockdowns in the Spring of 2020, then jumped again after February 2021’s winter storm Uri froze off US Gulf Coast refining, but then fell sharply due to increased exports to Europe following the onset of the Ukraine war, only to jump again following the Christmas 2022 refinery freeze-offs, changes in our commercial crude inventories had been less extreme up until the onset of the Iran war, when they were initially built up to a three year high by mid-April, before falling to the lowest in nearly eight years by late July…This week’s decrease was the third consecutive after four increases, and as of September 11th our commercial crude inventories were 1.9% above the 415,361,000 barrels of oil we had in commercial storage on September 12th of 2025, and were 1.4% more than the 417,513,000 barrels of oil that we had in storage on September 13th of 2024, and 1.1% more than the 418,456,000 barrels of oil we had left in commercial storage on September 15th of 2023…

This Week’s Rig Count

The US rig count increased by four over the week ending September 18th, as the number of rigs targeting oil was up by two, the count of rigs targeting natural gas was up by two, and miscellaneous rigs were unchanged…for a quick snapshot of this week’s rig count, we are again including below a screenshot of the rig count summary table from Baker Hughes…in the table below, the first column shows the active rig count as of September 18th, the second column shows the change in the number of working rigs between last week’s count (September 11th) and this week’s (September 18th) count, the third column shows last week’s September 11th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday of the same week of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting period a year ago, which in this week’s case was Friday, the 19th of September, 2025…

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August’s consumer and producer prices and existing home sales; July’s wholesale trade

Major reports released last week included the August Consumer Price Index and the August Producer Price Index, both from the Bureau of Labor Statistics, the Wholesale Trade, Sales and Inventories report for July from the Census Bureau, and the Existing Home Sales Report for August from the National Association of Realtors……this week also saw the Consumer Credit Report for July from the Fed, which indicated that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $20.1 billion in July, or at a 4.2% annual rate, as non-revolving credit expanded at a 4.8% rate to $3,829.0 billion, while revolving credit outstanding grew at a 2.5% rate to $1,357.2 billion…

CPI Rose 0.4% in August on Higher Prices for Fuel, Housing, and Phone Service

The consumer price index was 0.4% higher in August, as higher prices for fuel, rent, new and used cars and trucks, car and truck rentals, vehicle maintenance and repairs, motor oil, air fares, lodging away from home, eating out, school tuition and fees, appliances, computers, telephone services, TVs, sports vehicles, and trash collection were partly offset by lower prices for utilities, furniture, smartphones, toys, motor vehicle and health insurance, internet services, tax preparation, moving expenses, and admissions to entertainment venues ….the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the weighted average of seasonally adjusted prices for consumer goods and services was 0.4% higher in August, after being 0.1% higher in July, 0.4% lower in June, 0.5% higher in May, 0.6% higher in April, 0.9% higher in March, 0.3% higher in February, 0.2% higher in January, 0.3% higher in December, after being 0.2% higher the two months ending in November 0 f 2025, 0.3% higher last September, and 0.3% higher in August of last year….

The unadjusted CPI-U index, which was originally set to have prices of the 1982 to 1984 period equal to 100, rose from 333.918 in July to 334.980 in August, which left it 3.396548% higher than the index reading of 323.976 from August of last year, which is reported as a 3.4% year over year increase, matching the 3.4% year over year increase that was reported for July, with that widely cited year over year change simply reflecting the effect of last August’s rounded +0.3% increase dropping out of the comparison and being replaced by the current month’s rounded +0.4%, and not telling us anything more about inflation beyond that….with modestly higher prices for food and much higher prices for energy this month, seasonally adjusted core prices, which exclude both food and energy, were 0.3% higher over the month, as the unadjusted core price index rose from 337.133 in July to 338.041 in August, which left the core index 2.44598% ahead of its year ago reading of 329.970, which is reported as a 2.4% year over year increase, down from the 2.5% year over year core price increase that was reported for June, and well below the 6.6% annual increase reported for September 2022, which had been the largest annual increase in core prices in forty years…

The volatile seasonally adjusted energy price index was 2.1% higher in August, after being 1.5% lower in July, 5.7% lower in June, 3.9% higher in May, 3.8% higher in April, 10.9% higher in March, 0.6% higher in February, 1.5% lower in January, 0.3% higher in December, 1.1% higher in November, 1.5% higher last September, and 0.7% higher last August, and is now 16.3% higher than in August of a year ago….the price index for energy commodities was 4.2% higher in August, on a 4.1% increase in the price index for gasoline and a 10.1% increase in the price index for fuel oil, while the price index for “other energy commodities”, including propane, kerosene, and firewood, averaged out to be 0.9% higher….meanwhile, the price index for energy services was 0.4% lower, after rising 0.3% in July, as the price index for utility gas service was 1.1% lower in August, but is still 4.4% higher than it was a year ago, while the electricity price index was 0.2% lower, after rising 0.1% in July…. energy commodities are now averaging 28.0% above their year ago levels, with gasoline prices averaging 27.4% higher than they were a year ago, while the energy services price index is up 4.0% from last August, as electricity prices are still averaging 3.8% higher than a year ago…

Meanwhile, the seasonally adjusted food price index was 0.1% higher in August, after being 0.1% higher in July, 0.2% higher in June, 0.2% higher in May, 0.5% higher in April, unchanged in March, 0.4% higher in February, 0.2% higher in January, 0.7% higher in December, 0.1% higher over the two months ending last November, and after being 0.2% higher last September and 0.4% higher last August, and is still 3.0% higher than a year ago….the price index for food purchased for use at home was unchanged in August, while the price index for food bought to eat away from home was 0.3% higher, as average prices at fast food outlets was unchanged and average prices at full service restaurants rose 0.4%, while the price index for food at employee sites and schools was 0.6% higher, and prices for other food away from home averaged 0.3% higher…

In the food at home categories, the price index for cereals and bakery products was unchanged, as average bread prices rose 0.1%, the price index for flour and prepared flour mixes rose 1.4%, and the price index for cookies was 1.9% higher, while the price index for breakfast cereal fell 1.6%, and the price index for fresh cakes and cupcakes was 3.5% lower.…meanwhile, the price index for the meats, poultry, fish, and eggs food group was 0.1% higher, as the price index for poultry rose 0.4%, the price index for pork rose 0.4%, and egg prices were 2.9% higher….in addition, the seasonally adjusted price index for dairy products was 0.3% higher, even as average milk prices fell 1.2%, as the price index for cheese and related products rose 0.7% and the price index for other dairy products was 1.8% higher …on the other hand, the fruits and vegetables price index was 0.4% lower, as the price index for fresh vegetables fell 0.9%, the price index for fresh fruit fell 0.5%, and the price index for canned fruits was 0.3% lower.…meanwhile, the beverages price index was 0.2% higher, as the price index for carbonated drinks rose 1.2% and the price index for beverage materials other than coffee but including tea was 1.1% higher….lastly, the price index for the ‘other foods at home’ category was 0.1% higher, as the price index for salad dressing rose 5.0%, the price index for peanut butter rose 1.1%, the price index for snacks rose 1.1%, and the price index for prepared salads was 2.3% higher…

Among the seasonally adjusted core components of the CPI, which was 0.3% higher in August, after being 0.2% higher in July, unchanged in June, after rising by 0.2% in May, by 0.4% in April, 0.2% in March, by 0.2% in February, by 0.3% in January, by 0.2% in December, by 0.2% over the 2 months ending in November, and by 0.3% last August, the composite price index of all goods less food and energy goods was 0.1% higher in August, while the more heavily weighted composite index for all services less energy services was 0.3% higher..

Among the goods components of the core price index, which will initially be used by the Bureau of Economic Analysis to adjust August’s retail sales for inflation in national accounts data, the price index for household furnishings and supplies was unchanged, as  the price index for appliances rose 1.3%, the price index for floor coverings rose 1.5%, and the price index for outdoor equipment and supplies rose 1.0%, while the price index for furniture fell 0.9%, the price index for indoor plants and flowers fell 1.5, and the price index for household cleaning products was 0.6% lower….at the same time, the apparel price index was also unchanged, as a 2.1% increase in the price index for men’s suits, sport coats, and outerwear and a 4.9% increase in the price index for women’s dresses were offset by a 1.7% decrease in the price index for boys’ and girls’ footwear and a 1.6% decrease in the price index for jewelry and watches…. however, the price index for transportation commodities other than fuel was was 0.3% higher, as average prices for new vehicles rose 0.3%, average prices for used cars and trucks were 0.4% higher, and the price index for motor oil, coolant, and fluids was 2.6% higher….on the other hand, the price index for medical care commodities was 0.2% lower, as the price index for nonprescription drugs fell 1.0%, the price index for prescription drugs was unchanged, and the price index for medical equipment and supplies was 1.0% higher…meanwhile , the recreational commodities index was unchanged, as the price index for televisions rose 1.4%, the price index for sports vehicles including bicycles rose 1.8%, the price index for pets and pet products rose 0.7%, and the price index for recreational reading materials rose 2.9%, while the price index for video equipment other than televisions fell 6.1%, the price index for audio equipment fell 1.3%,and the price index for toys, games, hobbies and playground equipment was 3.3% lower… at the same time, the education and communication commodities index was 0.1% higher, as the price index for computers, peripherals, and smart home assistants rose 3.8%, but the price index for telephone hardware, calculators, and other consumer information items including smartphones was 2.4% lower.…lastly, a separate price index just for alcoholic beverages was 0.1% higher, while the price index for ‘other goods’ was 0.5% higher on a 0.8% increase in the price index for cigarettes, a 0.2% increase in the price index for cosmetics, perfume, bath, nail preparations and implements, and a 1.3% increase in the price index for miscellaneous personal goods…

Within core services, the price index for shelter was 0.3% higher, as rents rose 0.3%, and homeowner’s equivalent rent rose 0.2%, and prices for lodging away from home at hotels and motels were 2.7% higher, while the price index for tenants and household insurance was unchanged, and the price index for water, sewer and trash collection services was 0.5% higher but the price index for moving, storage, freight expense was 1.9% lower … however, the price index for medical care services was 0.2% lower, as price index for dental’ services fell 0.6%, and  the price index for health insurance was 0.5% lower…on the other hand, the transportation services price index was 0.5% higher, as the price index for airline fares rose 2.7%, the price index for car and truck rental rose 2.2% and the price index for motor vehicle maintenance and repair rose 1.1%, while the price index for motor vehicle insurance was 0.8% lower….at the same time, the recreation services price index was unchanged, as the price index for purchase, subscription, and rental of video rose 1.0%, the price index for veterinarian services rose 1.1% but the price index for admission to movies, theaters, and concerts was 0.6% lower…meanwhile, the price index for education and communication services was 1.8% higher, as the price index for elementary and high school tuition and fees rose 1.4% and the price index for wireless telephone services was 5.9% higher.…lastly, the price index for other personal services was 0.5% lower, as the price index for checking account and other bank services fell 2.0%,  the price index for laundry and dry cleaning rose 0.5%, and the price index for tax return preparation and other accounting fees was 0.4% lower…

Producer Price Index Rose 0.4% in August on Higher Energy & Transportation Prices

The seasonally adjusted Producer Price Index (PPI) for final demand was 0.4% higher in August, as the final demand price index for wholesale goods rose 1.1%, while the more heavily weighted price index for final demand for services was 0.1% higher…that 0.4% PPI  increase in August  followed a revised 0.1% increase in July, when the final demand price index for wholesale goods fell 0.4%, while the price index for final demand for services was 0.2% higher, and followed a revised 0.1% decrease in June, when the final demand price index for wholesale goods fell 1.4%, while the price index for final demand for services was 0.5% higher, and a revised 0.5% PPI increase in May, when the final demand price index for wholesale goods rose 2.2%, while price index for final demand for services was 0.2% lower, and followed a revised 1.1% increase in April, when the final demand price index for wholesale goods rose 1.9% and the price index for final demand for services was 0.8% higher, and an unrevised 0.8% increase in March, when the final demand price index for wholesale goods rose 2.0%, while the price index for final demand for services was 0.3% higher, and followed an unrevised 0.5% increase in February, when the final demand price index for wholesale goods was 1.0% higher, and the price index for final demand for services was 0.3% higher, and an unrevised 0.6% increase in January, when the final demand price index for wholesale goods was 0.1% lower, but the price index for final demand for services was 0.9% higher, and an unrevised 0.4% PPI increase in December, when the final demand price index for wholesale goods was 0.1% lower, while the price index for final demand for services was 0.6% higher, and a  0.4% PPI increase in November, when the final demand price index for wholesale goods was 0.8% higher, and the price index for final demand for services was 0.3% higher, and followed the report of a 0.1% PPI increase in October, when the final demand price index for wholesale goods fell 0.2%, but the more heavily weighted price index for final demand for services was 0.2% higher, and also followed a 0.6% PPI increase last September, when the final demand price index for wholesale goods rose 0.6% and the price index for final demand for services was also 0.6% higher….those post-shutdown reports followed a revised 0.2% decrease last August, when the final demand price index for wholesale goods rose 0.2%, but the more heavily weighted price index for final demand for services was 0.3% lower….on an unadjusted basis, producer prices are 5.4% higher than a year ago, while the core producer price index, which excludes food, energy and trade services, was 0.3% higher for the month. and is still 4.7% higher than it was a year ago…

As noted, the producer price index for final demand for goods was 1.1% higher in August, after being 0.4% lower in July, 1.4% lower in June, 2.2% higher in May, 1.9% higher in April, 2.0% higher in March, 1.0% higher in February, 0.1% lower in January, 0.1% lower in December, 0.8% higher in November, 0.1% lower in October, 0.6% higher last September, and 0.2% lower last August, and is now 7.7% higher than a year ago….the final demand goods price index was 1.1% higher in August because the price index for wholesale energy goods was 4.2% higher, after energy prices had been 1.8% lower in July, 6.8% lower in June, 8.2% higher in May, 7.1% higher in April, 10.5% higher in March, 2.0% higher in February, and 1.7% lower in January,  and as the price index for wholesale foods was 0.1% higher, after wholesale foods had been had been 0.9% lower in July, 0.6% lower in June, 0.6% higher in May, 0.3% higher in April, 0.6% lower in March, 2.3% higher in February, and 1.1% lower in January, and as the price index for final demand for core wholesale goods (excluding food and energy) was 0.4% higher in August, after it had been 0.2% higher in July, 0.2% higher in June, 0.7% higher in May, 0.7% higher in April, 0.4% higher in March, 0.4% higher in February. and 0.7% higher in January….

Wholesale energy prices were 4.2% higher in August on a 24.4% increase in wholesale prices for No. 2 diesel fuel, a 22.8% increase in wholesale prices for home heating oil and distillates, a 4.2% increase in wholesale prices for gasoline, and a 8.8% increase in wholesale prices for natural gas liquids, while the final demand for food price index was 0.1% higher on a 32.3% increase the wholesale price index for eggs for fresh use, a 4.3% increase in the wholesale price index for grains, and a 6.1% increase the wholesale price index for confectionery end products… among core wholesale goods, the wholesale price index for industrial chemicals rose 1.3%, the wholesale price index for oil field and gas field machinery rose 1.6%, the wholesale price index for electronic components and accessories rose 3.4%, and the wholesale price index for cigarettes was 2.5% higher…

Meanwhile, the price index for final demand for services was 0.1% higher in August, after being 0.2% higher in July, 0.5% higher in June, 0.2% lower in May, 0.8% higher in April, 0.3% higher in March, 0.3% higher in February, 0.9% higher in January, 0.6% higher in December, 0.2% higher in November, 0.2% higher in October, 0.6% higher last September, and 0.3% lower last August, and is now 4.5% higher than a year ago….the price index for final demand for trade services slipped 0.2% in July, but the price index for final demand for transportation and warehousing services rose 2.3%, while the core index for final demand for services other than trade, transportation, and warehousing services was unchanged….

Among trade services, seasonally adjusted margins for health, beauty, and optical goods retailers fell 3.6%, margins for fuels and lubricants retailers fell 11.3%, and margins for apparel wholesalers were 2.5% lower, while margins for automobile retailers rose 4.2%  and margins for hardware, building materials, and supplies retailers were 5.3% higher….among transportation and warehousing services, average margins for truck transportation of freight rose 2.0%, margins for air transportation of freight rose 1.5%, and margins for airline passenger services were 4.2% higher….among the components of the core final demand for services index, the price index for cable and satellite subscriber services rose 2.9%, the price index for credit intermediation, including trust services not otherwise listed rose 4.5%, and the price index for arrangement of cruises and tours rose 2.0%, while the price index for application software publishing fell 3.3%, the price index for portfolio management fell 1.6%, and the price index for management, scientific, and technical consulting services was 4.6% lower…

This report also showed the price index for intermediate processed goods was 1.8% higher in August, after being 0.4% lower in July, 1.0% lower in June, 2.7% higher in May, 2.6% higher in April, 3.0% higher in March, 1.5% higher in February, 0.1% higher in January, 0.1% higher in December, 0.6% higher in November, 0.1% lower in October, 0.2% higher last September, and 0.4% higher last August….the price index for intermediate energy goods rose 7.3% in August as refinery prices for No. 2 diesel fuel rose 24.1%, refinery prices for jet fuel rose 21.3%, refinery prices for gasoline rose 4.2%, and producer prices for natural gas liquids were 8.8% higher….on the other hand, the price index for intermediate processed foods and feeds fell 0.1%, as the producer price index for processed poultry fell 1.9%, the producer price index for meats fell 1.0%, and the producer price index for dairy products was 1.0% lower…meanwhile, the core price index for intermediate processed goods less food and energy goods was 0.5% higher, as the producer price index for basic organic chemicals rose 1.7%, the producer price index for paperboard rose 2.6%, the producer price index for copper and brass mill shapes rose 3.5%, the producer price index for nonferrous wire and cable rose 2.4%, the producer price index for steel mill products rose 1.7%, and the producer price index for switchgear, switchboard, and industrial controls equipment was 2.4% higher….average prices for intermediate processed goods are now 11.5% higher than in August 2025, the 22nd year over year increase in 42 months, but are way off the 26.6% year over year increase of November 2021, which had been a 46 year high…

Meanwhile, the price index for intermediate unprocessed goods rose 1.1% in August, after rising 0.7% in July, falling 6.5% % in June, rising 3.0% in May and 1.9% in April, falling 0.2% in March, rising 5.9% in February, rising 4.3% in January, and 2.1% in December and 2.4% in November, after falling 1.3% in October, falling 0.5% last September, and falling 1.8% last August….that was as the August price index for crude energy goods rose rose 1.5%, as crude oil prices rose 5.2%, unprocessed natural gas prices fell 11.6%, and coal prices were 1.0% lower… on the other hand, the price index for unprocessed foodstuffs and feedstuffs was 0.1% lower, as the producer price index for slaughter cattle fell 6.4%, the producer price index for raw milk fell  8.7%, and the producer price index for raw cane sugar and byproducts was 0.9% lower….meanwhile, the index for core raw materials other than food and energy materials was 2.1% higher, on a 5.4% increase in the price index for raw cotton, a 4.2% increase in the price index for copper base scrap, a 3.3% increase in the price index for aluminum base scrap,  and a 4.7% increase in the price index for recyclable paper….this raw materials price index is now 12.8% higher than a year ago, the 18th year over year increase in the past 43 months, which followed a run of twenty-seven consecutive year over year increases, which came after the annual change on this index had been negative from the beginning of 2019 through October of 2020…

Lastly, the price index for services for intermediate demand was 0.3% higher in August, after being 0.1% higher in July, 0.8% higher in June, 0.4% higher in May, 0.9% higher in April, 0.1% higher in March, 0.3% higher in February, 0.6% higher in January, 0.6% higher in December, 0.2% higher in November, 0.4% higher last October, 0.3% higher last September, and unchanged last August.…the price index for intermediate trade services was 1.0% higher, as margins for building materials, paint, and hardware wholesalers rose 1.6%, margins for intermediate hardware, building material, and supplies retailers, rose 5.3%, and margins for intermediate paper and plastics products wholesalers rose 1.3%….at the same time, the price index for transportation and warehousing services for intermediate demand was 0.5% higher, as the intermediate price index for truck transportation of freight rose 2.0%, the intermediate price index for air transportation of freight rose 1.5%, the intermediate index for air mail and package delivery services, excluding by USPS, rose 4.8%, and the intermediate index for transportation of passengers was 4.1% higher….on the other hand, the core price index for intermediate services other than trade, transportation, and warehousing services was 0.1% lower, as the intermediate price index for executive search services fell 5.7%, the intermediate price index for portfolio management fell 1.6%, the intermediate price index for television advertising time sales fell 2.4%, and the intermediate price index for management, scientific, and technical consulting services was 4.8% lower….over the 12 months ended in July, the price index for services for intermediate demand was 5.1% higher than it was a year earlier, the seventieth  consecutive annual increase in this index, after it had briefly turned negative year over year at the onset of the pandemic, from April to August of 2020, even as the current annual increase is still lower than the record 9.5% year over year increase that was indicated for July 2021…

Wholesale Sales Rose 0.8% in July; Wholesale Inventories Were Up 1.3%

The July report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $801.3 billion in July, up 0.8 percent (±0.4 percent) from the revised June level, and was up 13.0 percent (±0.5 percent) from wholesale sales of July 2025… the June preliminary sales estimate was revised to $794.9 billion from the $794.1 billion in sales reported last month, and hence the May to June change was revised to a 2.9 percent (±0.5 percent) decrease from the 3.0% percent (±0.5 percent) decrease that was reported last month.…as an intermediate activity, wholesale sales are not included in GDP except insofar as they are a trade service, since the traded goods themselves do not represent an increase in the output of the goods produced or finally sold….

On the other hand, the monthly change in private inventories is a major factor in GDP, as additional goods on the shelf or in intermediate storage represent goods that were produced but not sold, and this July report estimated that wholesale inventories were valued at a seasonally adjusted $958.9 billion at month end, up 1.3 percent (+/-0.2%)* from the revised June level. and 5.7 percent (±1.2 percent) higher than in June a year ago….at the same time, the June preliminary estimate revised from the $944.7 billion reported a month ago to $946.7 billion, which revised the June change from up 0.2% to up 0.4% from May….

For national accounts purposes, wholesale inventories are adjusted for price changes by category with the appropriate component of the producer price index.   The producer price index for July indicated that prices for finished goods were on average 0.4% lower, that prices for intermediate processed goods were also on average 0.4% lower, but that prices for unprocessed goods were 1.1% higher….hence, once adjusting for those changes in price, July’s real wholesale inventories were around 1.5% more than those at the end of the 2nd quarter, and maybe even more than that…since the key source data and assumptions(xls) for the second estimate of 2nd quarter GDP indicated that real wholesale inventories were down sharply in the 2nd quarter, accounting for over 35% the quarter’s inventory decrease, that this report appears to indicate a modest real increase in aggregate July’s wholesale inventories in comparison would therefore mean the change in inventories has increased, and hence the difference between the 2nd quarter decrease and the July increase would be added to the 3rd quarter’s real growth in GDP…

Existing Home Sales 2.0% Lower in August Despite Lower Prices

   The National Association of Realtors (NAR) reported that their seasonally adjusted count of existing home sales fell 2.0% from July to August, the 3rd consecutive decrease, projecting that 3.98 million homes would sell over an entire year if the August home sales pace were extrapolated over that year, a pace that was 1.2% below the 4.03 million annual sales rate they projected in August of a year ago….July’s home sales, at a 4.06 million annual rate, were revised  but unchanged  from the 4.06 million annual rate shown in last month’s report….the NAR also reported that the median sales price for all existing-home types was $429,100 in August, 1.6% higher than in August a year earlier, which they cite as “the 38th consecutive month of year-over-year price increases“…the NAR press release, which is titled “NAR Existing-Home Sales Report Shows 2.0% Decrease in August“, is in easy to read plain English, so if you’re interested in the details on housing inventories, which were the highest since November 2019, cash sales, distressed sales, first time home buyers, etc., you can easily find them in that press release…as sales of existing properties do not add to our national output, neither these home sales nor the prices for which these homes sell are included in GDP, except insofar as real estate, local government and banking services are rendered during the selling process…

Since this report is entirely seasonally adjusted and at a not very informative annual rate, we like to check the raw data overview (pdf), which gives us a close approximation of the actual number of homes that sold each month, and their prices….this unadjusted data indicates that roughly 363,000 homes sold in August, down by 9.5% from the 401,000 homes that sold in July, and down by 3.5% from the 376,000 homes that sold in August of last year…that same pdf indicates that the median home selling price for all housing types fell from a revised $436,400 in July and from a revised $442,800 in June to $429,100 in August, with the regional median home sales prices ranging from a low of $340,400 in the Midwest to a high of $619,100 in the West…

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

record high US oil output, oil supplies at 42 year low; SPR at 43½ year low; WTI at 16 week high; record diesel prices

US oil prices settled over $100 for the first time in 16 weeks; diesel prices at an all time high; production of crude from US wells at a record high; total US oil supplies lowest since March 1984 with the Strategic Petroleum Reserve the lowest since November 1982; oil refined was the most one week in seven years, refinery utilization rate was 2nd highest in eight years..

US oil prices rose for a fifth time in six weeks after the US “destroyed” at least eight Iranian oil tankers in the Persian Gulf and Gulf of Oman, Houthi attacks on Saudi oil facilities forced them to shut down, and Iran fired advanced missiles at U.S. warships in a new escalation of the war…after rising 9.7% to $91.48 a barrel last week after the US launched a new wave of attacks on Iranian infrastructure and shipping and Iran retaliated against US bases and allies in the region and their shipping, the contract price for the benchmark US light sweet crude for October delivery edged higher in early Asian trading on Monday after U.S. forces struck three Iranian crude carriers following Iranian missile attacks aimed at two U.S. warships, and traded at a six-week high, while ​Brent, the international benchmark​, settled 1.1% higher after Iran vowed to strike energy infrastructure across the Middle East in response to further U.S. attacks on its assets, further escalating a conflict that had sharply reduced oil supply from the region…oil prices surged nearly 3% during Asian trading hours on Tuesday after Yemen’s Houthis attacked energy facilities in Saudi Arabia, while Iran threatened the US with what it called “economic warfare,” increasing fears that the war would disrupt more oil supplies from the region, and touched a 13-week high in early trading in New York after fresh Houthi attacks on Saudi energy facilities forced their operations to shutdown​ , and settled $1.55 higher at $93.03 a barrel after the Houthi attacks on Saudi energy facilities set oil installations ablaze and threatened  a ‌major expansion of the Middle East war…oil prices climbed more than two percent across Asia on Wednesday, as escalating US-Iran tensions continued to roil global energy markets, then extended their rally Wednesday morning in New York, as the recent escalations in the U.S.-Iran war stoked further supply fears, and settled $3.02 higher at $96.05 a barrel after U.S. forces struck five Iranian oil tankers and Iran targeted a U.S. base in Jordan and attacked 10 ships…oil prices extended their gains in early global trading on Thursday after Iran said it had attacked 10 ships near the Strait of Hormuz, putting the spotlight back on the Strait and its role in global energy supplies, but traded slightly lower in London on Thursday morning on profit-taking after the strong ​price rise the previous day, then rallied to top $100 for the first time since May in early New York trading after the EIA reported the US Strategic Petroleum Reserve​ was near a record low and Cushing stocks ​were just off ‘tank bottoms’ and contined to ralliy to settle $6.43 higher at $102.48 a barrel for an eighth straight gain, the longest streak higher in more than three years, following the news that the Iran-aligned Houthis ​had seized control of Yemen’s port of Mocha on the Bab el-Mandab Strait, further increasing their threat to oil flows through the Red Sea….oil prices extended their climb during early Asian trading on Friday, reaching their highest since May​, as hostilities in the Gulf continued and the prospect of peace ​s​eemed even more remote, but retreated during morning trading in New York as reports that Iran was in negotiations with Gulf states to establish a jointly managed shipping route through the Strait of Hormuz weighed on prices, and settled $2.43 lower at $100.05 a barrel, reversing early gains after the Financial Times reported that foreign ministers in the Middle East were trying to work out a temporary deal with Iran to manage shipping through the Strait of Hormuz, but still finished 9.4% higher for the week, settling above $100 for the first time in over four months…

meanwhile, natural gas prices finished lower for the first time in five weeks as traders shifted their focus to the Autumn “shoulder season”, when little demand for either cooling or heating is expected….after rising 3% to $2.975 per mmBTU last week on lower production, higher LNG demand, and forecasts for record cooling demand in September, the price of the benchmark natural gas contract for October delivery opened 2 cents lower on Monday and gradually arced lower ​t​hrough the morning, as traders focus​ed on the impending shoulder season and fading cooling demand, and settled 5.9 cents lower at $2.916 per mmBTU​, as electric power demand dropped sharply and fading cooling demand outweighed strong LNG feedgas needs….natural gas prices opened 6.3 cents lower on Wednesday, tumbling overnight as shoulder season conditions took hold, and settled 9.4 cents lower at $2.822 per mmBTU as fading power demand and the approach of milder fall temperatures pressured the market, despite strong LNG feedgas ​demand  and expectations for a relatively lean storage ​r​eport Thursday…natural gas prices started Thursday 4.8 cents lower, moving down overnight as traders looked to easing demand as the season moves deeper into September, then dropped to an intraday low of $2.753 as a bearish storage report hit the wire, before posting a steady recovery in the following hours to settle 1.2 cents higher at $2.834 per mmBTU, supported by lower production and strong LNG feedgas demand, despite fading weather-driven demand and a larger-than-expected storage build…natural gas futures showed little sign of recovery on Friday morning, as traders assessed a bearish storage surprise and seasonal declines in power sector demand, and continued to slump through morning trading, weighed down by seasonally strong production readings and forecasts for waning weather demand, and settled 0.3 cents lower at $2.831 per mmBTU, and thus ended 4.8% lower for the week as rapidly fading power sector demand and the approaching shoulder season outweighed strong LNG feedgas and lower production.

The EIA’s natural gas storage report for the week ending September 4th indicated that the amount of working natural gas held in underground storage rose by 40 billion cubic feet to 3,254 billion cubic feet by the end of the week, which left our natural gas supplies 76 billion cubic feet, or 2.4% below the 3,333 billion cubic feet of gas that were in storage on September 4th of last year, but 148 billion cubic feet, or 5.2% above the five-year average of 3,106 billion cubic feet of natural gas that had typically been in working storage as of the 4th  of September over the most recent five years….the 40 billion cubic foot injection into natural gas storage for the cited week was more than the 35 billion cubic foot injection into storage that the market had been expecting ahead of the report, but it was less than the 69 billion cubic foot of gas that were injected into natural gas storage during the corresponding week of 2025, and also less than the average 52 billion cubic foot injection into natural gas storage that had been typical for the first week in September over the past five years…

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending September 4th showed that despite a big drop in our oil exports, we had we had to pull oil out of our stored crude supplies for the nineteenth time in twenty weeks, and for the 41st time in sixty-seven weeks, in part due to another increase in demand for oil the EIA could not account for…. Our imports of crude oil rose by an average of 53,000 barrels per day to 6,824,000 barrels per day, after rising by an average of 612,000 barrels per day during the prior week, while our exports of crude oil fell by an average of 1,066,000 barrels per day to average 3,417,000 barrels per day, which, when used to offset our imports, meant that the net of our trade of oil worked out to an import average of 3,407,000 barrels of oil per day during the week ending September 4th, an average of 1,119,000 more barrels per day than the net of our imports minus our exports during the prior week… At the same time, transfers to our oil supplies from Alaskan gas liquids, from natural gasoline, from condensate, and from unfinished oils were unchanged from the prior week at 887,000 barrels per day, while during the same week, production of crude from US wells was 85,000 barrels per day higher at a record high of 13,947,000 barrels per day.  Hence, our daily supply of oil from the net of our international trade in oil, from transfers, and from domestic well production appears to have averaged a total of 18,241,000 barrels per day during the September 4th reporting week…

Meanwhile, US oil refineries reported they were processing an average of 17,586,000 barrels of crude per day during the week ending September 4th, an average of 91,000 more barrels per day than the amount of oil that our refineries reported they were processing during the prior week, and the most we’ve refined in one week in seven years, while over the same period, the EIA’s surveys indicated that a total of 233,000 barrels of oil per day were being pulled from the supplies of oil stored in the US… So, based on all that reported & estimated data, the crude oil figures provided by the EIA appear to indicate that our total working supply of oil from storage, from net imports, from transfers, and from oilfield production during the week ending September 4th averaged a rounded 888,000 more barrels per day than what our oil refineries reported they used during the week.  To account for the difference between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a [ -888,000 ] barrel per day figure onto line 16 of the weekly U.S. Petroleum Balance Sheet, in order to make the reported data for the supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus indicating there must have been a error or omission of that amount in the week’s oil supply & demand figures that we have just transcribed…. Since 623,000 barrels per day of demand for could not be accounted for in the prior week’s EIA data, that means there was a 265,000 barrel per day difference between this week’s oil balance sheet error and the EIA’s crude oil balance sheet error from a week ago, and hence the changes to supply and demand from that week to this one that are indicated by this week’s report are somehow off by that much, and therefore not very useful… However, since most oil traders react to the figures in these weekly EIA reports as if they were gospel, and since these weekly figures therefore often drive oil pricing and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it’s published, and just as it’s watched & believed to be reasonably reliable by most everyone in the industry…(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil supply, see this EIA explainer….also see this March 2023 twitter thread from an EIA administrator addressing these ongoing weekly errors, and what they had once hoped to do about it).

This week’s rounded 233,000 barrel per day average decrease in our overall crude oil inventories came as an average of 56,000 barrels per day were being pulled out of our commercial stocks of crude oil, while 178,000 barrels per day were being pulled out of our Strategic Petroleum Reserve, the twenty-fourth consecutive Iran war related withdrawal from the SPR, including the four largest draws in SPR history, which left the SPR level at 285,360,000 barrels, the lowest since it was initially being filled in November 1982….with both commercial oil and the SPR both down again this week, that left the Total of all US Oil Supplies at 709,429,000 barrels, down 18.5% from 870,774,000 barrels on April 17th, and the lowest since March 30th, 1984….

Further details from the weekly Petroleum Status Report (pdf) indicated that the 4 week average of our oil imports fell to 6,586,000 barrels per day last week, which was still 2.3% more than the 6,436,000 barrel per day average that we were importing over the same four-week period last year, while the four week average of our exports rose to 3,940,000 barrels per day last week, which was 6.4% more than the 3,703,000 barrel per day average that we were exporting last year year at this time… This week’s crude oil production was reported to be 85,000 barrels per day higher at all time high of  13,947,000 barrels per day as the EIA’s estimate of the output from wells in the lower 48 states was 71,000 barrels per day higher at 13,490,000 barrels per day, while Alaska’s oil production was 14,000 barrels per day higher at 457,000 barrels per day…US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was 6.5% higher than that of our pre-pandemic production peak, and was also 43.8% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021.

US oil refineries were operating at 97.8% of their capacity while processing those 17,586,000 barrels of crude per day during the week ending September 4th, down from 98.0% the prior week, but still the second highest refinery utilization rate in eight years ….the 17,586,000 barrels of oil per day that were refined that week were the most we’ve refined in one week since August 16th, 2019, 4.6% more than the 16,818,000 barrels of crude that were being processed daily during the week ending September 5th of 2025, and 0.5% more than the 17,495,000 barrels that were being refined during the pre-pandemic week ending September 6th, 2019, when our refinery utilization rate was at 96.4%, which was close to the pre-pandemic normal utilization rate for this time of year…

Even with the increase in the amount of oil that was being refined this week, gasoline output from our refineries was somewhat lower, decreasing by 587,000 barrels per day to 9,308,000 barrels per day during the week ending September 4th, after our refineries’ gasoline output had increased by 73,000 barrels per day during the prior week… This week’s gasoline production was 2.9% lower than the 9,587,000 barrels of gasoline that were being produced daily over the week ending September 5th of last year, and 10.2% less than the gasoline production of 10,360,000 barrels per day seen during the prepandemic week ending September 6th, 2019….on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 222,000 barrels per day to 5,348,000 barrels per day, after our distillates output had decreased by 9,000 barrels per day during the prior week.  After that big production increase, our distillates output was 2.3% more than the 5,229,000 barrels of distillates that were being produced daily during the week ending September 5th of 2025, and 0.1% more than the 5,341,000 barrels of distillates that were being produced daily during the pre-pandemic week ending September 6th, 2019….

Even with this week’s decrease in our gasoline production, our supplies of gasoline in storage at the end of the week rose for the sixth time in thirty weeks, increasing by 1,269,000 barrels to 206,938,000 barrels during the week ending September 4th, after our gasoline inventories had decreased by 1,173,000 barrels to a 42 week low during the prior week.  Our gasoline supplies rose this week because the amount of gasoline supplied to US users fell by 371,000 barrels per day to 8,551,000 barrels per day, and because our imports of gasoline rose by 94,000 barrels per day to 464,000 barrels per day, and because our exports of gasoline fell by 62,000 barrels per day to 872,000 barrels per day… After fifty-four gasoline inventory withdrawals over the past eighty-one weeks, our gasoline supplies were 5.9% lower than last September 5th’s gasoline inventories of 219,997,000 barrels, and about 5% below the five year average of our gasoline supplies for this time of year…

After this week’s big increase in distillates production, our supplies of distillates rose for the seventeenth time in thirty weeks, increasing by 2,087,000 barrels to 106,274,000 barrels during the week ending September 4th, after our distillates supplies had increased by 796,000 barrels during the prior week… Our distillates supplies rose by more this week even though the amount of distillates supplied to US markets, an indicator of domestic demand, rose by 288,000 barrels per day to 3,678,000 barrels per day, because our exports of distillates fell by 179,000 barrels per day to 1,556,000 barrels per day, and because our imports of distillates rose by 72,000 barrels per day to 185,000 barrels per day… After 28 withdrawals from distillates inventories over the past 60 weeks, our distillates supplies at the end of the week were 11.9% lower than the 20,638,000 barrels of distillates that we had in storage on September 5th of 2025, and were about 13% below the five year average of our distillates inventories for this time of the year…

Finally, even after the big drop in our oil exports, our commercial supplies of crude oil in storage fell for the 14th time in twenty-six weeks, and for the 26th time over the past year, decreasing by 391,000 barrels over the week, from 424,460,000 barrels on August 28th to 424,069,000 barrels on September 4th, after our commercial crude supplies had decreased by 4,450,000 barrels over the prior week….After this week’s decrease, our commercial crude oil inventories were back to the recent five-year average of commercial oil supplies for this time of year, while they were still about 28% above the average of our available crude oil stocks as of the first weekend of September over the 5 years at the beginning of the past decade, with the difference between those comparisons arising because it wasn’t until early 2015 that our oil inventories had first topped 400 million barrels. After our commercial crude oil inventories had jumped to record highs during the Covid lockdowns in the Spring of 2020, then jumped again after February 2021’s winter storm Uri froze off US Gulf Coast refining, but then fell sharply due to increased exports to Europe following the onset of the Ukraine war, only to jump again following the Christmas 2022 refinery freeze-offs, changes in our commercial crude inventories had been less extreme up until the onset of the Iran war, when they were initially built up to a three year high by mid-April, before falling to the lowest in nearly eight years by late July…This week’s decrease was the second in six weeks, and as of September 4th our commercial crude inventories were 0.1% below the 424,646,000 barrels of oil we had in commercial storage on September 5th of 2025, but were 1.2% more than the 419,143,000 barrels of oil that we had in storage on September 6th of 2024, and 0.8% more than the 420,592,000 barrels of oil we had left in commercial storage on September 8th of 2023…

This Week’s Rig Count

The US rig count increased by three over the week ending September 11th, as the number of rigs targeting oil was up by one, the count of rigs targeting natural gas was up by two, and miscellaneous rigs were unchanged…for a quick snapshot of this week’s rig count, we are again including below a screenshot of the rig count summary table from Baker Hughes…in the table below, the first column shows the active rig count as of September 11th, the second column shows the change in the number of working rigs between last week’s count (September 4th) and this week’s (September 11th) count, the third column shows last week’s September 4th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday of the same week of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting period a year ago, which in this week’s case was Friday, the 12th of September, 2025…

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August jobs report; July’s trade deficit, construction spending, factory inventories, and JOLTS, et al

Major reports released last week included the Employment Situation Summary for August and the Job Openings and Labor Turnover Survey (JOLTS) report for July, both from the Bureau of Labor Statistics, and three July reports that provide us with preliminary input data to 3rd quarter GDP, and also suggest revisions to 2nd quarter GDP: the July report on our International Trade from the Bureau of Economic Analysis, and the July report on Construction Spending (pdf), and the Full Report on Manufacturers’ Shipments, Inventories and Orders for July, both from the Census Bureau…

The week’s major privately issued reports included the ADP Employment Report for August, wherein the national payroll processor reported a 38,000 increase in private jobs in August, the light vehicle sales report for August from Omida, aka Wards Automotive, which estimated that vehicles sold at a 16.8 million annual rate in August, up from the 16.3 million annual sales rate reported in July, and up from the 16.5 million annual rate reported for August a year ago, and both of the widely followed purchasing manager’s surveys from the Institute for Supply Management (ISM): the August Manufacturing Report On Business indicated that the manufacturing PMI (Purchasing Managers Index) fell to 54.6% in August, down from 55.6% in July, which means that a smaller plurality of manufacturing industry purchasing managers reported improving metrics in various facets of their business in August than in July, and the August Services Report On Business; which saw their Services PMI rise to 55.4% in August, up from 54.1% in July, indicating a larger plurality of service industry purchasing managers reported improvement in various facets of their business in August than in July…

Employers Added 162,000 Jobs in August; Unemployment Rate Unchanged

The Employment Situation Summary for August indicated a payroll jobs increase that was above expectations and the highest initial report since March, an unemployment rate that was unchanged, and an increase in both the employment rate and the labor force participation rate….estimates extrapolated from the establishment survey data indicated that employers added a seasonally adjusted 162,000 jobs in August, after the payroll job change for July was revised from a decrease of 23,000 jobs to an increase of 21,000 jobs, while the payroll jobs change for June was revised from an increase of  20,000 jobs to an increase of 31,000 jobs, revisions which combined means that this report indicates an increase of 217,000 more jobs than were reported last month, in contrast to the 50,000 job addition that was expected …the unadjusted data shows that there were actually 154,000 more payroll jobs in August, as downward adjustments to sectors that normally see an increase in August, such as education, were mostly offset by upward adjustments to sectors that normally see a job decrease, such as retail sales and leisure and hospitality….

Seasonally adjusted job increases were spread through the goods producing, service providing, and government sectors, with a loss of 23,000 jobs in the information sector the only notable decrease…since the BLS summary of the job gains by sector is clear and usually more detailed than our usual synopsis, we’ll just quote from that summary here:

• Total nonfarm payroll employment rose by 162,000 in August, higher than the average monthly gain of 31,000 over the prior 12 months. In August, employment increased in food services and drinking places and in local government education. The information industry lost jobs. (See table B-1.)
• Employment in food services and drinking places increased by 59,000 in August, well above the average monthly gain of 12,000 over the prior 12 months.
• Local government education added 42,000 jobs in August, largely offsetting a decrease in the prior month. Local government education has shown little net change since January 2025.
• In August, employment in manufacturing continued its upward trend (+16,000) and is up by 58,000 since a recent low in December 2025. Employment in machinery manufacturing (+6,000) and in fabricated metal product manufacturing (+6,000) continued trending up in August.
• Employment in health care continued to trend up in August (+13,000) but at a slower pace than the average monthly gain over the prior 12 months (+32,000). Over the month, home health care services (+11,000) and hospitals (+8,000) added jobs.
• Information employment declined by 23,000 in August, following losses that had averaged 8,000 per month over the prior 12 months. In August, job losses occurred in computing infrastructure providers, data processing, web hosting, and related services (-8,000), in publishing industries (-7,000), and in broadcasting and content providers (-5,000).
• Construction employment changed little in August (+22,000). Employment in nonresidential specialty trade contractors continued to trend up (+8,000), similar to the average monthly gain over the prior 12 months (+6,000).
• Employment showed little change over the month in other major industries, including mining, quarrying, and oil and gas extraction; wholesale trade; retail trade; transportation and warehousing; financial activities; professional and business services; social assistance; and other services.

The establishment survey also showed that average hourly pay for all employees rose by 10 cents an hour to $37.75 an hour, after it had increased by a revised 5 cents an hour in July; at the same time, the average hourly earnings of production and non-supervisory employees increased by 11 cents to $32.53 an hour….employers also reported that the average workweek for all private payroll employees rose by a tenth of an hour to 34.4 hours, while average weekly hours for production and non-supervisory personnel were unchanged at 33.8 hours…meanwhile, the manufacturing workweek increased by 0.1 hour to 40.5 hours, while average factory overtime was unchanged at 3.1 hours…

At the same time, the seasonally adjusted extrapolation from the August household survey indicated that the number of those who would self-report being employed rose by an estimated 569,000 to 162,746,000, while the similarly estimated number of those who would be counted as unemployed rose by 115,000 to 7,031,000; which together meant that August saw a net rounded increase of 683,000 to 169,777,000 in the total labor force…since the working age population had grown by 133,000 over the same period, that meant the number of employment aged individuals who were not in the labor force fell by a rounded 551,000 to 105,638,000….the increase in the total labor force was enough to raise the labor force participation rate, from 61.4% in July to 61.6% in August, even as it was still down from 62.3% in August of last year….at the same time, the increase in number employed vis-a-vis the population was great enough to increase the employment to population ratio, which we could think of as an employment rate, from 58.9% in July to
59.1% in August, which was still down from 59.6% a year ago…however, the increase in the number counted as unemployed was not enough to raise the unemployment rate as a percentage of the labor force, as it remained at 4.1%….meanwhile, the number who reported they were involuntarily working part time fell by 414,000 to 4,390,000 in August, which meant that the alternative measure of unemployment, U-6, which includes those “employed part time for economic reasons”, fell from 7.9% in July to 7.7% in August, the lowest U6 unemployment rate since last June….

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

Job Openings Rose in July, Hiring, Layoffs, and Job Quitting All Fell

The Job Openings and Labor Turnover Survey (JOLTS) report for July from the Bureau of Labor Statistics estimated that seasonally adjusted job openings rose by 89,000, from 7,182,000 in June to 7,271,000 in July, after June’s job openings were revised 177,000 lower, from the 7,359,000 reported a month ago to 7,182,000 with this report…July’s jobs openings were still 2.6% higher than the 7,089,000 job openings reported for July a year ago, as the job opening ratio expressed as a percentage of the employed rose from 4.3% in June to 4.4% in July, and was also up from 4.3% in July a year ago….a 76,000 job opening increase to 429,000 job openings in durable goods manufacturing appears to be the largest percentage increase in openings this month, while a decrease from 383,000 to 316,000 job openings in transportation, warehousing, and utilities looks to be the largest percentage decrease… (see table 1 for more details)…like most BLS releases, the press release for report is easy to understand and also refers us to the associated table for the data cited, which are linked at the end of the release…

The JOLTS release also reports on labor turnover, which consists of hires and job separations, which in turn is further divided into layoffs and discharges, those who quit, and ‘other separations’, which includes retirements and deaths….in July, seasonally adjusted new hires totaled 5,054,000, down by 278,000 from the revised 5,332,000 who were hired or rehired in June, as the hiring rate as a percentage of all employed fell from 3.4% in June to 3.2% in July, while it was also down from the 3.3% hiring rate in July of a year earlier (details of hiring by sector since March are in table 2)….meanwhile, total separations fell by 265,000, from 5,337,000 in June to 5,072,000 in July, while the separations rate as a percentage of the employed also fell from 3.4% in June to 3.2% in July, while it was also down from the 3.3% separations rate in July a year ago (see table 3)…subtracting the 5,072,000 total separations from the total hires of 5,054,000 would imply a decrease of 18,000 jobs in July, as opposed to the revised payroll job increase of 21,000 for July reported by the August establishment survey later in the week, but still with the expected +/-110,000 margin of error in these incomplete employment extrapolations…

Breaking down the seasonally adjusted job separations, the BLS finds that 3,056,000 of us voluntarily quit our jobs in July, down by 157,000 from the revised 3,213,000 who quit their jobs in June, while the quits rate, widely watched as an indicator of worker confidence, fell from 2.0% in June to 1.9% in July, and it was also down from the 2.0% quits rate in July a year earlier (see details in table 4)….in addition to those who quit, another 1,666,000 were either laid off, fired or otherwise discharged in July, down by 119,000 from the revised 1,785,000 who were discharged in June, as the discharges rate fell from 1.1% in June to 1.0% in July of all those who were employed during the month, which was also down from the 1.1% discharges rate of a year earlier….meanwhile, other separations, which includes retirements and deaths, were at 350,000 in July, up from the revised 340,000 other separations in June, for an ‘other separations rate’ of 0.2%, the same as in June and as in July of last year….both seasonally adjusted and unadjusted details by industry and by region on hires and job separations, and on job quits and discharges can be accessed using the links to tables at the bottom of the press release…

US Trade Deficit Rose 24.4% in July on Higher Imports of Capital Goods, Lower Exports of Crude Oil

Our trade deficit increased by 24.4% in July, after decreasing by a revised 6.0% in June, as the value of our exports decreased while the value of our imports increased…the Commerce Department’s report on our international trade in goods and services for July indicated that our seasonally adjusted goods and services trade deficit increased by $17.4 billion to a rounded $88.6 billion in July, up from a revised June deficit of $71.2 billion, which had previously been reported at $73.3 billion…trade figures going back to January were also revised with this report, which on net left the 2nd quarter trade deficit about $5.7 billion lower than was previously reported, suggesting a large upward revision to 2nd quarter GDP, the magnitude of which depends on the 1st quarter revisions, which will be recomputed and included in the annual revision to GDP at the end of September…

After rounding, the value of our exports fell by $6.6 billion, or 2.1%, to $310.7 billion in July, on a $6.2 billion decrease to $201.0 billion in our exports of goods, and a $0.4 billion decrease to $109.7 billion in our exports of services, while our imports rose by $10.8 billion, or 2.8 percent, to $399.3 billion, on an $11.4 billion increase to $320.6 billion in our imports of goods, partly offset by a $0.6 billion decrease to $78.7 billion in our imports of services…export prices were on average 1.3% lower in July, so a good part of this month’s decrease in exports was due to lower prices, and real exports were likely only 0.8% lower, while import prices were 0.4% lower, meaning that the increase in the value of our imports was despite lower prices, and that our real imports likely rose around 3.2%..

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

Exports of goods on a Census basis decreased $5.9 billion.

•     Industrial supplies and materials decreased $8.7 billion.
  • Crude oil decreased $4.5 billion.
  • Nonmonetary gold decreased $3.9 billion.
• Capital goods increased $1.9 billion.
• Consumer goods increased $1.7 billion.
  • Pharmaceutical preparations increased $1.0 billion.

  Net balance of payments adjustments decreased $0.3 billion.

Imports of goods on a Census basis increased $12.0 billion.

• Capital goods increased $14.4 billion.
  • Computers increased $6.9 billion.
  • Computer accessories increased $6.6 billion.
  • Semiconductors increased $1.2 billion.
• Industrial supplies and materials decreased $1.8 billion.
  • Crude oil decreased $1.8 billion.

  Net balance of payments adjustments decreased $0.6 billion.

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

The July figures show surpluses, in billions of dollars, with Netherlands ($7.8), South and Central America ($6.6), Hong Kong ($3.1), United Kingdom ($2.5), Brazil ($2.4), Singapore ($1.9), Saudi Arabia ($1.3), Australia ($1.2), and Belgium ($0.9). Deficits were recorded, in billions of dollars, with Mexico ($27.5), Vietnam ($23.3), Taiwan ($18.1), China ($15.2), South Korea ($10.4), European Union ($8.9), Germany ($5.6), India ($5.0), Malaysia ($4.8), Japan ($4.2), Ireland ($3.9), Canada ($3.2), Italy ($2.5), France ($1.3), Switzerland ($0.6), and Israel ($0.5).

• The deficit with Mexico increased $7.2 billion to $27.5 billion in July. Exports decreased $0.2 billion to $32.6 billion and imports increased $7.0 billion to $60.1 billion.
• The balance with Switzerland shifted from a surplus of $2.9 billion in June to a deficit of $0.6 billion in July. Exports decreased $2.0 billion to $4.4 billion and imports increased $1.5 billion to $5.0 billion.
• The deficit with Canada decreased $3.7 billion to $3.2 billion in July. Exports increased $0.5 billion to $29.3 billion and imports decreased $3.3 billion to $32.5 billion.

To gauge the impact of July’s international trade in goods on 3rd quarter GDP growth figures, we use exhibit 10 in the pdf for this report, which gives us monthly goods trade figures by end use category and in total, already adjusted in chained 2017 dollars, the same inflation adjustment used by the BEA to compute trade figures for GDP, except they are not annualized here….from that table, we can compute that the 2nd quarter’s real exports of goods averaged 157,830.7 million monthly in 2017 dollars, while July’s inflation adjusted exports came in at 150,810 million in that same 2017 dollar quantity index representation….figuring the annualized change between those two figures, we find that July’s real exports of goods are running at a 16.6% annual rate below those of the 2nd quarter, or at a pace that would subtract about 1.18 percentage points from 3rd quarter’s GDP if it were continued through August and September…..in a similar manner, we find that our 2nd quarter real imports of goods averaged 250,698.3 million monthly in chained 2017 dollars, while the similarly inflation adjusted July goods imports were at 257,197 million…that would indicate that so far in the 3rd quarter, our real imports of goods have grown at a 10.78% annual rate from those of the 2nd quarter…since imports subtract from GDP because they represent the portion of consumption or investment that occurred during the quarter that was not produced domestically, their increase at a 10.78% rate would subtract about 1.11 percentage points from 3rd quarter GDP….hence, if the July trade deficit is maintained at the same level throughout the 3rd quarter, our deteriorating balance of trade in goods over that of the 2nd quarter would subtract a net of about 2.29 percentage points from the growth rate of 3rd quarter GDP….

You might note that we have not even computed the impact of the usually less volatile change in services here, because the BEA does not provide inflation adjusted data on those, and we don’t have a straightforward way to adjust the various services for all their price changes, but that our exports in services fell $0.4 billion in July, while our imports in services fell $0.6 billion, which would suggest a small boost to GDP from the services side of the international trade ledger…

Construction Spending Fell 0.5% in July after June Spending was Revised Slightly Higher

The Census Bureau report on construction spending for July (pdf) estimated that the month’s seasonally adjusted construction spending would work out to $2,157.6 billion annually if extrapolated over an entire year, which was 0.5 percent (±0.8 percent)* below the revised annualized estimate of $2,167.7 billion of construction spending in June, and 2.8 percent (±1.5 percent) below the estimated annualized level of construction spending in July of last year….the June construction spending estimate was revised less than 0.1% higher, from $2,166.5 billion to $2,167.7 billion, while the annual rate of construction spending for May was revised a bit lower, from $2,168.5 billion to $2,168.4 billion….on net, those revisions mean that construction during the 2nd quarter was about $1.1 billion greater, at an annual rate, than the figures used in last week’s GDP estimate, which would suggest there’d need to be an upward revision of about 0.02 percentage points to 2nd quarter GDP when the third estimate is released at the end of September, assuming the net impacts from the inflation adjustments on the revisions are similar to those we saw in the 2nd GDP estimate…

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

• Private Construction: Spending on private construction was at a seasonally adjusted annual rate of $1,614.2 billion, 0.5 percent (±0.3 percent) below the revised June estimate of $1,622.9 billion. Residential construction was at a seasonally adjusted annual rate of $859.0 billion in July, 1.3 percent (±1.3 percent)* below the revised June estimate of $870.6 billion. Nonresidential construction was at a seasonally adjusted annual rate of $755.2 billion in July, 0.4 percent (±0.3 percent) above the revised June estimate of $752.4 billion.
• Public Construction: In July, the estimated seasonally adjusted annual rate of public construction spending was $543.4 billion, 0.2 percent (±1.6 percent)* below the revised June estimate of $544.7 billion. Educational construction was at a seasonally adjusted annual rate of $112.3 billion, 0.2 percent (±1.6 percent)* below the revised June estimate of $112.5 billion. Highway construction was at a seasonally adjusted annual rate of $150.3 billion, 0.2 percent (±4.6 percent)* below the revised June estimate of $150.6 billion.

Construction spending data inputs into 3 subcomponents of GDP; investment in private non-residential structures, investment in residential structures, and into government investment outlays, for both state and local and Federal governments…however, getting an accurate read on the impact of July spending reported in this release on 3rd quarter GDP is difficult because all figures given here are in nominal dollars and as you know, data used to compute the change in GDP must be adjusted for changes in price…the National Income and Product Accounts Handbook, Chapter 6 (pdf), lists a multitude of PPI indices and a number of privately published deflators that are used by the BEA for each of the various components of non-residential investment, so in lieu of trying to adjust for all of those different 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 approximate estimate…

That price index showed that aggregate construction costs were up 2.2% in July, after rising 0.1% in June, and after rising 0.1% from April to May…on that basis, we can estimate that July construction costs were roughly 2.4% more than those of April, roughly 2.3% more than those of May, and obviously 2.2% more than those of June…we then use those percentages to inflate the lower priced spending figures for each of those months, which is arithmetically the same as deflating higher priced July construction spending, for comparison purposes…annualized construction spending in millions of nominal dollars for the months of the second quarter is given as 2,167,698 for June, 2,168,396 for May, and 2,168,231 for April, while it was at 2,157,581 million in July …thus to compare July’s inflation adjusted construction spending to inflation adjusted spending of the second quarter, our arithmetic formula becomes: 2,157,581 / (((2,167,698 * 1.022) + (2,168,396 * 1.023) + (2,168,231 * 1.024)) / 3) = 0.97277, meaning real construction spending in July was down 2.72% vis a vis the 2nd quarter, or down at a 10.5% annual rate…to figure the effect of that change on GDP, we take the difference between the ‘inflation adjusted’ second quarter spending average and that of July, and then take that result as a fraction of 2nd quarter GDP, and estimate that aggregate July construction spending is falling at a rate that would subtract approximately 0.35 percentage points from 3rd quarter GDP, should we see no improvement from July’s adjusted figures in August or September…

Factory Shipments Rose 0.9% in July, Factory Inventories Rose 0.3%

The July Full Report on Manufacturers’ Shipments, Inventories, & Orders (pdf) from the Census Bureau reported that the seasonally adjusted value of new orders for manufactured goods rose by $5.8 billion or 0.9 percent to $663.6 billion, following a decrease of 0.2% to $657.8 billion in June, which was revised from the 0.3% decrease to $656.5 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 accurate as a revised update to the July advance report on durable goods we reported on last week…on those revisions, the Census Bureau’s own summary, which precedes their detailed spreadsheet of the metrics included in this report, is quite complete, so we’ll just quote directly from that here:

• Summary: New orders for manufactured goods in July, up following two consecutive monthly decreases, increased $5.8 billion or 0.9 percent to $663.6 billion, the U.S. Census Bureau reported today. This followed a 0.2 percent June decrease. Shipments, up nine of the last ten months, increased $5.3 billion or 0.8 percent to $658.8 billion. This followed a virtually unchanged June increase. Unfilled orders, up twenty-four of the last twenty-five months, increased $9.9 billion or 0.6 percent to $1,600.3 billion. This followed a 0.6 percent June increase. The unfilled orders-to-shipments ratio was 6.81, down from 6.84 in June. Inventories, up ten consecutive months, increased $3.5 billion or 0.4 percent to $966.9 billion. This followed a 0.1 percent June increase. The inventories-to-shipments ratio was 1.47, unchanged from June.
• New Orders for manufactured durable goods in July, up four of the last five months, increased $3.6 billion or 1.1 percent to $339.4 billion, unchanged from the previously published increase. This followed a 0.6 percent June increase. Transportation equipment, up following two consecutive monthly decreases, led the increase, $2.6 billion or 2.3 percent to $116.2 billion. New orders for manufactured nondurable goods increased $2.2 billion or 0.7 percent to $324.2 billion. 
• Shipments of manufactured durable goods in July, up ten of the last eleven months, increased $3.1 billion or 0.9 percent to $334.6 billion, down from the previously published 1.0 percent increase. This followed a 1.0 percent June increase. Transportation equipment, up nine of the last ten months, led the increase, $1.4 billion or 1.3 percent to $111.6 billion. Shipments of manufactured nondurable goods, up seven of the last eight months, increased $2.2 billion or 0.7 percent to $324.2 billion. This followed a 0.9 percent June decrease. Petroleum and coal products, up six of the last seven months, led the increase, $1.6 billion or 2.4 percent to $69.8 billion.
• Unfilled Orders for manufactured durable goods in July, up twenty-four of the last twenty-five months, increased $9.9 billion or 0.6 percent to $1,600.3 billion, unchanged from the previously published increase. This followed a 0.6 percent June increase. Transportation equipment, up eleven of the last twelve months, led the increase, $4.6 billion or 0.5 percent to $1,006.3 billion.
• Inventories of manufactured durable goods in July, up ten consecutive months, increased $2.4 billion or 0.4 percent to $604.7 billion, unchanged from the previously published increase. This followed a 0.4 percent June increase. Primary metals, up seventeen consecutive months, led the increase, $0.8 billion or 1.5 percent to $52.0 billion. Inventories of manufactured nondurable goods, up five of the last six months, increased $1.1 billion or 0.3 percent to $362.2 billion. This followed a 0.3 percent June decrease. Petroleum and coal products, up following two consecutive monthly decreases, led the increase, $0.8 billion or 1.6 percent to $47.6 billion. By stage of fabrication, July materials and supplies increased 0.2 percent in durable goods and decreased 0.1 percent in nondurable goods. Work in process increased 0.6 percent in durable goods and 1.1 percent in nondurable goods. Finished goods increased 0.4 percent in durable goods and 0.3 percent in nondurable goods.

To estimate the effect of those July factory inventories on 3rd 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 were valued 0.4% higher at $329,960 million; the value of work in process inventories rose 0.7% to $273,540 million, and materials and supplies inventories were valued 0.1% higher at $363,362 million.…at the same time, the July producer price index reported that prices for finished goods were on average 0.7% lower, that prices for intermediate processed goods were on average 0.6% lower, while prices for unprocessed goods were 1.8% lower….assuming similar valuations for like types of inventories, those price changes would suggest that July’s real finished goods inventories were about 1.1% higher, that real inventories of intermediate processed goods were about 1.3% higher, and real raw material inventories were about 1.9% higher…since real NIPA factory inventories were down sharply in the 2nd quarter, accounting for about two thirds of the quarter’s inventory decrease, that this report appears to indicate a modest real increase in aggregate July factory inventories would therefore mean that the difference between the 2nd quarter decrease and the July increase would be added to the 3rd quarter’s real growth in GDP…

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

US oil output a record high; refinery utilization an 8 year high, oil refined at a 7 year high; road fuel supplies an 18 year low

production of crude from US wells​ matches record high; Strategic Petroleum Reserve the lowest since November 1982; refinery utilization rate is highest in 8 years; barrels of oil refined are highest in ​s​even years; gasoline inventories at a 42 week low, combined road fuel inventories at their lowest in 18 years.

US oil prices rose for the third time in four weeks after the US launched a new wave of attacks on Iranian infrastructure and shipping and Iran retaliated against US bases and allies in the region and their shipping…after falling 4.2% to $83.40 a barrel last week as the US policy impetus seemed to have shifted to economic sanctions on Iran, reducing the level of violence around the Persian Gulf, the contract price for the benchmark US light sweet crude for October delivery climbed more than 2% in early Asian trading on Monday after the United States carried out strikes against Iran’s Larak Island in the Strait of Hormuz, prompting an Iranian response and raising fresh concerns over the security of the vital global energy route, and was up 3% as markets opened in the US following the first exchange of fire between Washington and Tehran in over a month, and settled $2.36 higher at $85.76 a barrel on the renewed military strikes in the Middle East and concerns of further oil supply disruptions… oil prices rose again during Asian trading on Tuesday as renewed fighting between the United States and Iran in the Middle East revived concerns over potential disruptions to supplies from the key global oil-producing region, and likewise moved nearly 2% higher Tuesday morning in New York as the renewed military exchanges between Washington and Tehran stoked supply disruption fears, and then rallied to settle $4.46 or 5.2% higher at a five week high of $90.22 a barrel following attacks on two tankers carrying Saudi crude oil in the Strait of Hormuz….the October oil contract rose another 0.8% in early Asian trading on Wednesday, as concerns grew over supply disruptions after the United States and Iran exchanged strikes overnight, dashing hopes that tensions in the Middle East would ease quickly, but retreated in early US trading as traders awaited official U.S. petroleum inventory data for the prior week amid mixed signals for energy freight on the Strait of Hormuz from the U.S.-Iran war. then was little changed in volatile trading after the EIA reported that both the SPR and the Cushing OK oil depot were near tank bottoms, despite record production, and settled 79 cents higher at $91.01 a barrel after Iran responded to US strikes on Tuesday by striking what it said were U.S. assets in Bahrain, Jordan, Kuwait and Iraq….oil prices edged lower during Asian trading on Thursday as traders assessed ​the uncertainty surrounding ​the renewed military strikes between the United States and Iran, and their potential impact on Middle East supplies, but turned around and rallied to a six week high during morning trade in London after renewed US attacks on Iran, along with fresh Israeli threats against Tehran, heightened concerns over potential disruptions to Middle East supplies, then gave back most of th​ose gains Thursday morning in New York as the market balanced concerns over the impact of heightened fighting in the Middle East with U.S. President Trump’s hints that current hostilities might wind down again​, before settling 29 cents higher at $91.30 a barrel as Iran continued to strike U.S. Gulf allies​, with Kuwait intercepting incoming missiles and drones and after Israel’s Defense Minister said Israel would destroy Iran’s military and civilian infrastructure, including energy facilities, if Iran launched attacks against it…oil prices rose half a percen​t during Asian trading on Friday and were headed for their biggest weekly increase since mid-July as renewed hostilities between the US and Iran intensified concerns over potential disruptions to oil supplies, but they were little changed Friday morning in London amid the renewed tensions in the Middle East, and then retreated in early trading Friday morning in New York as renewed U.S.-Iran hostilities sustained fears of prolonged supply disruptions through the Strait of Hormuz, before rolling over and settling 18 cents higher at $91.48 a barrel on renewed US-Iran strikes and record high diesel prices, and thus finish​e​d 9.7% higher for the week….

meanwhile, natural gas prices finished higher for a fourth straight week on lower production, higher LNG demand and forecasts for record cooling demand in September…after rising 3.4% to $2.888 per mmBTU last week on a smaller than normal injection of gas into storage, and on forecasts for the exceptionally hot weather in the South to continue into early September, the price of the benchmark natural gas contract for October delivery opened 2.1 cents lower on Monday, but quickly trended higher, as the latest forecasts were calling for a historically warm September, and settled 4.7 cents higher at $2.935 per mmBTU as forecasts put September among the hottest on record, with recovering LNG demand and shrinking storage surpluses stacked against production running near record highs….however, ​October natural gas opened 7.5 cents lower on Tuesday, as traders shrugged off the bullish weather forecasts to focus on high supply levels, but pared those early losses to settle 3.1 cents lower at $2.904 per mmBTU​, as the season’s first Gulf Coast tropical storm bore down on the Texas-Louisiana LNG corridor without denting feedgas nominations…  natural gas prices started 0.4 cents lower on Wednesday, but trended higher through the morning amid continued forecasts for elevated cooling demand in September and steady LNG exports, and settled 5.2 cents higher at $2.956 per mmBTU as increasingly bullish September heat forecasts gave traders another reason to test the $3 mark, while renewed US-Iran fighting added a fresh jolt from overseas….natural gas prices opened 1.8 cents higher on Thursday and traded near $2.985 ahead of the weekly storage report, then momentarily jumped to the intraday high of $3.005 ​w​hen the report hit the wire, only to plummet minutes later and ultimately settle​ 4.3 cents lower at $2.913 per mmBTU​, despite unseasonably hot near-term forecasts and formidable year/year storage deficits in multiple regions…natural gas futures ticked up early Friday as traders digested a narrowing but still substantial storage surplus, choppy yet seasonally solid production, robust late-summer cooling demand and strong LNG volumes, then strengthened as midday approached, underpinned by lower production and a warmer extended outlook, and settled 6.2 cents higher at $2.975 per mmBTU amid impressive late summer cooling demand, tightening storage balances and rejuvenated LNG feedgas flows, leaving natural gas prices 3.0% higher for the week…

The EIA’s natural gas storage report for the week ending August 28th indicated that the amount of working natural gas held in underground storage rose by 30 billion cubic feet to 3,214 billion cubic feet by the end of the week, which left our natural gas supplies 50 billion cubic feet, or 1.5% below the 3,264 billion cubic feet of gas that were in storage on August 28th of last year, but 160 billion cubic feet, or 5.2% above the five-year average of 3,054 billion cubic feet of natural gas that had typically been in working storage as of the 28th  of August over the most recent five years….the 30 billion cubic foot injection into natural gas storage for the cited week was close to the 31 billion cubic foot injection into storage that the market had been expecting ahead of the report, but it was less than the 50 billion cubic foot of gas that were injected into natural gas storage during the corresponding week of 2025, and also less than the average 37 billion cubic foot injection into natural gas storage that had been typical for the fourth week in August over the past five years…

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending August 28th showed that after an increase in our oil exports an increase in our refining, and an increase in demand for oil the EIA could not account for, we had we had to pull oil out of our stored crude supplies for the eighteenth time in nineteen weeks, and for the 40th time in sixty-six weeks, including another big withdrawal of oil from the SPR and a large withdrawal from commercial crude supplies…. Our imports of crude oil rose by an average of 612,000 barrels per day to 6,770,000 barrels per day, after falling by an average of 435,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 691,000 barrels per day to average 4,483,000 barrels per day, which, when used to offset our imports, meant that the net of our trade of oil worked out to an import average of 2,287,000 barrels of oil per day during the week ending August 28th, an average of 79,000 fewer barrels per day than the net of our imports minus our exports during the prior week… At the same time, transfers to our oil supplies from Alaskan gas liquids, from natural gasoline, from condensate, and from unfinished oils w​e​re 4,000 barrels per day higher than the prior week at 887,000 barrels per day, while during the same week, production of crude from US wells​ was 19,000 barrels per day higher at a 43 week high of 13,862,000 barrels per day.  Hence, our daily supply of oil from the net of our international trade in oil, from transfers, and from domestic well production appears to have averaged a total of 17,036,000 barrels per day during the August 28th reporting week…

Meanwhile, US oil refineries reported they were processing an average of 17,496,000 barrels of crude per day during the week ending August 28th, an average of 102,000 more barrels per day than the amount of oil that our refineries reported they were processing during the prior week​ and the most we’ve refined in ​one week in ​s​even years, while over the same period, the EIA’s surveys indicated that a total of 1,082,000 barrels of oil per day were being pulled from the supplies of oil stored in the US… So, based on all that reported & estimated data, the crude oil figures provided by the EIA appear to indicate that our total working supply of oil from storage, from net imports, from transfers, and from oilfield production during the week ending August 28th averaged a rounded 623,000 more barrels per day than what our oil refineries reported they used during the week.  To account for the difference between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a [ -623,000 ] barrel per day figure onto line 16 of the weekly U.S. Petroleum Balance Sheet, in order to make the reported data for the supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus indicating there must have been a error or omission of that amount in the week’s oil supply & demand figures that we have just transcribed…. Since 214,000 barrels per day of demand for could not be accounted for in the prior week’s EIA data, that means there was a 409,000 barrel per day difference between this week’s oil balance sheet error and the EIA’s crude oil balance sheet error from a week ago, and hence the changes to supply and demand from that week to this one that are indicated by this week’s report are somehow off by that much, and therefore pretty useless… However, since most oil traders react to the figures in these weekly EIA reports as if they were gospel, and since these weekly figures therefore often drive oil pricing and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it’s published, and just as it’s watched & believed to be reasonably reliable by most everyone in the industry…(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil supply, see this EIA explainer….also see this March 2023 twitter thread from an EIA administrator addressing these ongoing weekly errors, and what they had once hoped to do about it).

This week’s rounded 1,082,000 barrel per day average decrease in our overall crude oil inventories came as an average of 636,000 barrels per day were being pulled out of our commercial stocks of crude oil, while 446,000 barrels per day were being pulled out of our Strategic Petroleum Reserve, the twenty-third consecutive Iran war related withdrawal from the SPR, including the four largest draws in SPR history, which left the SPR level at 286,604,000 barrels, the lowest since it was initially being filled in November 1982….Further details from the weekly Petroleum Status Report (pdf) indicated that the 4 week average of our oil imports rose to 6,715,000 barrels per day last week, which was 1.8% more than the 6,598,000 barrel per day average that we were importing over the same four-week period last year, while the four week average of our exports rose to 3,884,000 barrels per day last week, which was 1.6% less than the 3,911,000 barrel per day average that we were exporting last year year at this time… This week’s crude oil production was reported to be 19,000 barrels per day higher at 13,862,000 barrels per day, matching it’s all time high set November 7, 2025,  as the EIA’s estimate of the output from wells in the lower 48 states was 6,000 barrels per day higher at 13,419,000 barrels per day, while Alaska’s oil production was 13,000 barrels per day higher at 443,000 barrels per day…US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was 5.8% higher than that of our pre-pandemic production peak, and was also 42.9% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021.

US oil refineries were operating at 98.0% of their capacity while processing those 17,496,000 barrels of crude per day during the week ending August 28th, up from 97.4% the prior week, and the highest refinery utilization rate since the week ending August 17th, 2018….the 17,496,000 barrels of oil per day that were refined that week were the most we’ve refined in one week since August 16th, 2019, 3.7% more than the 16,869,000 barrels of crude that were being processed daily during the week ending August 29th of 2025, and 0.7% more than the 17,381,000 barrels that were being refined during the pre-pandemic week ending August 30th, 2019, when our refinery utilization rate was at 94.8%, which was close to the pre-pandemic normal utilization rate for this time of year…

With the increase in the amount of oil that was being refined this week, gasoline output from our refineries was also higher, increasing by 73,000 barrels per day to 9,845,000 barrels per day during the week ending August 28th, after our refineries’ gasoline output had increased by 61,000 barrels per day during the prior week… This week’s gasoline production was 0.3% lower than the 9,872,000 barrels of gasoline that were being produced daily over the week ending August 29th of last year, and 4.2% less than the gasoline production of 10,272,000 barrels per day seen during the prepandemic week ending August 30th, 2019….on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 9,000 barrels per day to 5,126,000 barrels per day, after our distillates output had decreased by 81,000 barrels per day during the prior week.  With three straight production decreases, our distillates output was 2.4% less than the 5,253,000 barrels of distillates that were being produced daily during the week ending August 29th of 2025, and 0.5% less than the 5,154,000 barrels of distillates that were being produced daily during the pre-pandemic week ending August 30th, 2019….

Even with this week’s increase in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the 25rd time in twenty-nine weeks, decreasing by 1,173,000 barrels to a 42 week low of 205,669,000 barrels during the week ending August 28th, after our gasoline inventories had decreased by 2,536,000 barrels during the prior week.  Our gasoline supplies fell this week even though the amount of gasoline supplied to US users fell by 121,000 barrels per day to  8,922,000 barrels per day because our imports of gasoline fell by 195,000 barrels per day to 370,000 barrels per day, and because our exports of gasoline rose by 44,000 barrels per day to 934,000 barrels per day… After fifty-four gasoline inventory withdrawals over the past eighty weeks, our gasoline supplies were 5.9% lower than last August 29th’s gasoline inventories of 218,539,000 barrels, and about 6% below the five year average of our gasoline supplies for this time of year…

After this week’s modest decrease in distillates production, our supplies of distillates rose for the sixteenth time in twenty-nine weeks, increasing by 796,000 barrels to 104,187,000 barrels during the week ending August 28th, after our distillates supplies had decreased by 2,228,000 barrels during the prior week… Our distillates supplies rose this week because the amount of distillates supplied to US markets, an indicator of domestic demand, fell by 449,000 barrels per day to 3,390,000 barrels per day, and because our exports of distillates fell by 55,000 barrels per day to 1,735,000 barrels per day, while our imports of distillates fell by 63,000 barrels per day to 113,000 barrels per day… After 28 withdrawals from distillates inventories over the past 59 weeks, our distillates supplies at the end of the week were 10.1% lower than the 115,923,000 barrels of distillates that we had in storage on August 29th of 2025, and were about 14% below the five year average of our distillates inventories for this time of the year…since our gasoline inventories fell more than distillates inventories rose, our combined road fuel inventories were again at their lowest in 18 years..

Finally, after the increase in our refining and in our oil imports, our commercial supplies of crude oil in storage fell for the 13th time in twenty-six weeks, and for the 25th time over the past year, decreasing by 4,450,000 barrels over the week, from 428,910,000 barrels on August 21st to 424,460,000 barrels on August 28th, after our commercial crude supplies had increased by 95,000 barrels over the prior week….After this week’s decrease, our commercial crude oil inventories were still about 1% above the recent five-year average of commercial oil supplies for this time of year, while they were about 28% above the average of our available crude oil stocks as of the last weekend of August over the 5 years at the beginning of the past decade, with the difference between those comparisons arising because it wasn’t until early 2015 that our oil inventories had first topped 400 million barrels. After our commercial crude oil inventories had jumped to record highs during the Covid lockdowns in the Spring of 2020, then jumped again after February 2021’s winter storm Uri froze off US Gulf Coast refining, but then fell sharply due to increased exports to Europe following the onset of the Ukraine war, only to jump again following the Christmas 2022 refinery freeze-offs, changes in our commercial crude inventories had been less extreme up until the onset of the Iran war, when they were initially built up to a three year high by mid-April, before falling to the lowest in nearly eight years by late July…This week’s decrease was the first in five weeks, and as of August 28th our commercial crude inventories were 0.9% above the 420,707,000 barrels of oil we had in commercial storage on August 29th of 2025, and were 1.5% more than the 418,310,000 barrels of oil that we had in storage on August 30th of 2024, and 0.4% more than the 422,944,000 barrels of oil we had left in commercial storage on August 25th of 2023…

This Week’s Rig Count

The US rig count was unchanged for a second week over the week ending September 4th, as the number of rigs targeting oil was up by two, the count of rigs targeting natural gas was down by two, and miscellaneous rigs were unchanged…for a quick snapshot of this week’s rig count, we are again including below a screenshot of the rig count summary table from Baker Hughes…in the table below, the first column shows the active rig count as of September 4th, the second column shows the change in the number of working rigs between last week’s count (August 28th) and this week’s (September 4th) count, the third column shows last week’s August 28th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday of the same week of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting period a year ago, which in this week’s case was Friday, the 4th of September, 2025…

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

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

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

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

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

As we review this month’s revisions, remember that the GDP press release reports all quarter over quarter percentage changes at an annual rate, which means that they’re expressed as a change a bit over 4 times of that what actually occurred from one 3 month period to the next, and that the prefix “real” is used to indicate that each change has been adjusted for inflation using price changes chained from 2017, and then that all percentage changes in this report are calculated from those 2017 dollar figures, which would be better thought of as quantity indexes than as any reality based dollar amounts…for our purposes, all the data that we’ll use in reporting the changes here comes directly from National Income and Product Accounts Data Tables……

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

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

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

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

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

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

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

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

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

Before personal consumption expenditures are used in the GDP computation, they must first be adjusted for inflation to give us the real change in consumption, and hence the real change in goods and services that were produced for that consumption….the BEA does that by computing a price index for personal consumption expenditures, which is a chained price index based on 2017 prices = 100, and which is included in NIPA Table 2.8.4 for this report….that index rose from 131.454 in June to 131.659 in July, a month over month inflation rate that’s statistically 0.155948%, which BEA reports as a PCE price index increase of 0.2 percent for July, following the decrease of 0.1 percent in the PCE price index they reported for June, even as the full decimal fractions are used in all their computations…note that when the PCE price indexes are applied to a given month’s annualized PCE in current dollars, it yields that month’s annualized real PCE in chained 2017 dollars, which are the means that the BEA uses to compare the real goods and services produced in one month or one quarter to the real goods and services produced in another….that result is shown in NIPA Table 2.8.6, where we see that July’s chained dollar consumption total works out to an annual rate of 16,901.3 billion, 0.0076923% more than June’s 16,900.0 billion, a difference in real PCE that the BEA reports as unchanged…

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The EIA’s natural gas storage report for the week ending August 21st indicated that the amount of working natural gas held in underground storage rose by 15 billion cubic feet to 3,184 billion cubic feet by the end of the week, which left our natural gas supplies 30 billion cubic feet, or 0.9% below the 3,214 billion cubic feet of gas that were in storage on August 21st of last year, but 167 billion cubic feet, or 5.5% above the five-year average of 3,017 billion cubic feet of natural gas that had typically been in working storage as of the 21st of August over the most recent five years….the 15 billion cubic foot injection into natural gas storage for the cited week equaled the 15 billion cubic foot injection into storage that the market had been expecting ahead of the report, but it was less than the 17​ billion cubic foot of gas that were injected into natural gas storage during the corresponding week of 2025, and also less than the average 33 billion cubic foot injection into natural gas storage that had been typical for the third week in August over the past five years…

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending August 21st showed that after a decrease in our oil imports and an increase in demand for oil the EIA could not account for, we had we had to pull oil out of our stored crude supplies for the seventeenth time in eighteen weeks, and for the 39th time in sixty-five weeks, as a​n​other big withdrawal of oil from the SPR ​l​ed to a small addition to commercial crude supplies…. Our imports of crude oil fell by an average of 435,000 barrels per day to 6,158,000 barrels per day, after falling by an average of 746,000 barrels per day during the prior week, while our exports of crude oil fell by an average of ​2​74,000 barrels per day to average 3,792,000 barrels per day, which, when used to offset our imports, meant that the net of our trade of oil worked out to an import average of 2,366,000 barrels of oil per day during the week ending August 21st, an average of 161,000 fewer barrels per day than the net of our imports minus our exports during the prior week… At the same time, transfers to our oil supplies from Alaskan gas liquids, from natural gasoline, from condensate, and from unfinished oils was 2,000 barrels per day lower than the prior week at 883,000 barrels per day, while during the same week, production of crude from US wells was 13,000 barrels per day higher at 13,843,000 barrels per day.  Hence, our daily supply of oil from the net of our international trade in oil, from transfers, and from domestic well production appears to have averaged a total of 17,092,000 barrels per day during the August 21st reporting week…

Meanwhile, US oil refineries reported they were processing an average of 17,393,000 barrels of crude per day during the week ending August 21st, an average of 1,000 fewer barrels per day than the amount of oil that our refineries reported they were processing during the prior week, while over the same period, the EIA’s surveys indicated that a net of 515,000 barrels of oil per day were being pulled from the supplies of oil stored in the US… So, based on all that reported & estimated data, the crude oil figures provided by the EIA appear to indicate that our total working supply of oil from storage, from net imports, from transfers, and from oilfield production during the week ending August 21st averaged a rounded 214,000 more barrels per day than what our oil refineries reported they used during the week.  To account for the difference between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a [ -214,000 ] barrel per day figure onto line 16 of the weekly U.S. Petroleum Balance Sheet, in order to make the reported data for the supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus indicating there must have been a error or omission of that amount in the week’s oil supply & demand figures that we have just transcribed…. Since 29,000 barrels per day of oil supply could not be accounted for in the prior week’s EIA data, that means there was a 243,000 barrel per day difference between this week’s oil balance sheet error and the EIA’s crude oil balance sheet error from a week ago, and hence the changes to supply and demand from that week to this one that are indicated by this week’s report are somehow off by that much. and therefore not very useful… However, since most oil traders react to to the figures in these weekly EIA reports as if they were gospel, and since these weekly figures therefore often drive oil pricing and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it’s published, and just as it’s watched & believed to be reasonably reliable by most everyone in the industry…(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil supply, see this EIA explainer….also see this March 2023 twitter thread from an EIA administrator addressing these ongoing weekly errors, and what they had once hoped to do about it).

This week’s rounded 515,000 barrel per day average decrease in our overall crude oil inventories came as an average of 14,000 barrels per day were being added to our commercial stocks of crude oil, while 529,000 barrels per day were being pulled out of our Strategic Petroleum Reserve, the twenty-second consecutive Iran war related withdrawal from the SPR, including the four largest draws in SPR history, which left the SPR level at 289,726,000 barrels, the lowest since it was initially being filled in November 1982….Further details from the weekly Petroleum Status Report (pdf) indicated that the 4 week average of our oil imports rose to 6,572,000 barrels per day last week, which was 2.6% more than the 6,403,000 barrel per day average that we were importing over the same four-week period last year, while the four week average of our exports fell to 3,650,000 barrels per day last week, which was 2.6% less than the 3,769,000 barrel per day average that we were exporting last year year at this time… This week’s crude oil production was reported to be 13,000 barrels per day higher at 13,843,000 barrels per day as the EIA’s estimate of the output from wells in the lower 48 states was 6,000 barrels per day higher at 13,413,000 barrels per day, while Alaska’s oil production was 7,000 barrels per day higher at 430,000 barrels per day…US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was 5.7% higher than that of our pre-pandemic production peak, and was also 42.7% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021.

US oil refineries were operating at 97.4% of their capacity while processing those 17,393,000 barrels of crude per day during the week ending August 21st, up from 97.2% the prior week, and the highest refinery utilization rate since September 7th, 2018….the 17,393,000 barrels of oil per day that were refined that week were 3.0% more than the 16,880,000 barrels of crude that were being processed daily during the week ending August 22nd of 2025, but were less than 0.1% less than the 17,408,000 barrels that were being refined during the pre-pandemic week ending August 23rd, 2019, when our refinery utilization rate was at 95.2%, which was close to the pre-pandemic normal utilization rate for this time of year…

While there was little change in the amount of oil that was being refined this week, gasoline output from our refineries was higher, increasing by 61,000 barrels per day to 9,772,000 barrels per day during the week ending August 21st, after our refineries’ gasoline output had increased by 143,000 barrels per day during the prior week… This week’s gasoline production was 2.3% higher than the 9,554,000 barrels of gasoline that were being produced daily over the week ending August 22nd of last year, but 8.3% less than the gasoline production of 10,660,000 barrels per day seen during the prepandemic week ending August 23rd, 2019….on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 91,000 barrels per day to 5,135,000 barrels per day, after our distillates output had decreased by 54,000 barrels per day during the prior week.  With those decreases, our distillates output was 1.6% less than the 5,217,000 barrels of distillates that were being produced daily during the week ending August 22nd of 2025, and 1.1% less than the 5,193,000 barrels of distillates that were being produced daily during the pre-pandemic week ending August 23rd, 2019….

Even with this week’s increase in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the 22nd time in twenty-eight weeks, decreasing by 2,536,000 barrels to a 41 week low of 206,842,000 barrels during the week ending August 21st, after our gasoline inventories had increased by 688,000 barrels during the prior week.  Our gasoline supplies fell this week because the amount of gasoline supplied to US users rose by 354,000 barrels per day to  9,043,000 barrels per day, and even though our imports of gasoline rose by 199,000 barrels per day to 565,000 barrels per day, while our exports of gasoline rose by 38,000 barrels per day to 890,000 barrels per day… After fifty-three gasoline inventory withdrawals over the past seventy-nine weeks, our gasoline supplies were 7.0% lower than last August 22nd’s gasoline inventories of 222,334,000 barrels, and about 6% below the five year average of our gasoline supplies for this time of year…

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

Finally, even after the decrease in our oil imports, another big withdrawal from the SPR meant that our commercial supplies of crude oil in storage rose for the 14th time in twenty-six weeks, and for the 28th time over the past year, increasing by 95,000 barrels over the week, from 428,815,000 barrels on August 14th to 428,910,000 barrels on August 21st, after our commercial crude supplies had increased by 4,405,000 barels over the prior week….After this week’s increase, our commercial crude oil inventories were about 1% above the recent five-year average of commercial oil supplies for this time of year, while they were about 29% above the average of our available crude oil stocks as of the third weekend of August over the 5 years at the beginning of the past decade, with the difference between those comparisons arising because it wasn’t until early 2015 that our oil inventories had first topped 400 million barrels. After our commercial crude oil inventories had jumped to record highs during the Covid lockdowns in the Spring of 2020, then jumped again after February 2021’s winter storm Uri froze off US Gulf Coast refining, but then fell sharply due to increased exports to Europe following the onset of the Ukraine war, only to jump again following the Christmas 2022 refinery freeze-offs, changes in our commercial crude supplies had been less extreme up until the onset of the Iran war, when they were initially built up to a three year high by mid-April…However, after falling sharply over three months to the lowest in nearly eight years four weeks ago, our commercial crude oil inventories have since rebounded, and as of August 21st were 2.5% above the 418,292,000 barrels of oil we had in commercial storage on August 22nd of 2025, and were 0.9% more than the 425,183,000 barrels of oil that we had in storage on August 23rd of 2024, but were 1.1% less than the 433,528,000 barrels of oil we had left in commercial storage on August 18th of 2023…

This Week’s Rig Count

The US rig count ​n​etted out as unchanged over the week ending August 2​8​th, as the number of rigs targeting oil was down by ​f​ive, the count of rigs targeting natural gas was ​u​p by five, and miscellaneous rigs were ​u​nchanged…for a quick snapshot of this week’s rig count, we are again including below a screenshot of the rig count summary table from Baker Hughes…in the table below, the first column shows the active rig count as of August 2​8​th, the second column shows the change in the number of working rigs between last week’s count (August 21st) and this week’s (August 2​8​th) count, the third column shows last week’s August 21st​ active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday of the same week of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting period a year ago, which in this week’s case was Friday, the 2​​9​th​ of August, 2025…

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July’s industrial production and new home construction

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

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

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

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

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

This report also provides capacity utilization figures, which are expressed as the percentage of our plant and equipment that was in use during the month, and which indicated that seasonally adjusted capacity utilization for total industry rose from 76.2% in June to 76.3% in July, after capacity utilization for June was revised up from the 76.1% reported a month ago…capacity utilization for NAICS durable goods production facilities rose from 75.8% in June to 76.2% in July, while capacity utilization for non-durables producers fell from 76.0% to 75.6% at the same time….meanwhile, capacity utilization for the mining sector was at 86.1% in July, after June’s utilization was revised down from 87.4% to 86.0%….meanwhile. utilities were operating at 70.0% of capacity during July, up from their 69.8% of capacity during June, a figure that was originally reported at 69.5%….for more details on capacity utilization by type of manufacturer, see Table 7: Capacity Utilization: Manufacturing, Mining, and Utilities, which shows the historical capacity utilization figures for a dozen types of durable goods manufacturers, 8 classifications of non-durable manufacturers, mining, utilities, and capacity utilization for a handful of other special categories…

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

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

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

The monthly data on new building permits, with a smaller margin of error, are probably a better monthly indicator of new housing construction trends than the volatile and often sharply revised housing starts data….in July, Census estimated new building permits were being issued for a seasonally adjusted annual rate of 1,443,000 housing units, which was 5.0 percent above the revised June annual rate of 1,374,000 permits, and was 3.1 percent above the rate of building permit issuance in July a year earlier…the annual rate for housing permits issued in June was revised from 1,367,000 to 1,374,000….

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

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

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

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

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

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

The EIA’s natural gas storage report for the week ending August 14th indicated that the amount of working natural gas held in underground storage rose by 16 billion cubic feet to 3,169 billion cubic feet by the end of the week, which left our natural gas supplies 28 billion cubic feet, or 0.9% below the 3,197 billion cubic feet of gas that were in storage on August 14th of last year, but 185 billion cubic feet, or 6.2% above the five-year average of 2,984 billion cubic feet of natural gas that had typically been in working storage as of the 14th of August over the most recent five years….the 16 billion cubic foot injection into natural gas storage for the cited week was close to the 14 billion cubic foot injection into storage that the market had been expecting ahead of the report, but it was less than the 19 billion cubic foot of gas that were injected into natural gas storage during the corresponding week of 2025, and also less than the average 29 billion cubic foot injection into natural gas storage that had been typical for the second week in August over the past five years…

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending August 14th showed that after a big decrease in our oil imports and a jump in our oil exports, we had we had to pull oil out of our stored crude supplies for the sixteenth time in seventeen weeks, and for the 38th time in sixty-four weeks, as the ​withdraw​al of oil from the SPR was greater than the addition to commercial crude supplies…. Our imports of crude oil fell by an average of 746,000 barrels per day to 6,593,000 barrels per day, after rising by an average of 1,140,000 barrels per day to a twenty month high during the prior week, while our exports of crude oil rose by an average of 1,008,000 barrels per day to average 4,066,000 barrels per day, which, when used to offset our imports, meant that the net of our trade of oil worked out to an import average of 2,527,000 barrels of oil per day during the week ending August 14th, an average of 1,754,000 fewer barrels per day than the net of our imports minus our exports during the prior week… At the same time, transfers to our oil supplies from Alaskan gas liquids, from natural gasoline, from condensate, and from unfinished oils was 662,000 barrels per day higher than the prior week at 886,000 barrels per day, while during the same week, production of crude from US wells was 25,000 barrels per day higher at 13,830,000 barrels per day.  Hence, our daily supply of oil from the net of our international trade in oil, from transfers, and from domestic well production appears to have averaged a total of 17,243,000 barrels per day during the August 14th reporting week…

Meanwhile, US oil refineries reported they were processing an average of 17,395,000 barrels of crude per day during the week ending August 14th, an average of 215,000 more barrels per day than the amount of oil that our refineries reported they were processing during the prior week, while over the same period, the EIA’s surveys indicated that a net of 123,000 barrels of oil per day were being pulled from the supplies of oil stored in the US… So, based on all that reported & estimated data, the crude oil figures provided by the EIA appear to indicate that our total working supply of oil from storage, from net imports, from transfers, and from oilfield production during the week ending August 14th averaged a rounded 29,000 fewer barrels per day than what our oil refineries reported they used during the week.  To account for the difference between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a [ +29,000 ] barrel per day figure onto line 16 of the weekly U.S. Petroleum Balance Sheet, in order to make the reported data for the supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus indicating there must have been a error or omission of that amount in the week’s oil supply & demand figures that we have just transcribed…. ​​But since 486,000 barrels per day of oil supply could not be accounted for in the prior week’s EIA data, that means there was a 457,000 barrel per day difference between this week’s oil balance sheet error and the EIA’s crude oil balance sheet error from a week ago, and hence the changes to supply and demand from that week to this one that are indicated by this week’s report are somehow off by that much. and therefore pretty useless… However, since most oil traders react to to the figures in these weekly EIA reports as if they were gospel, and since these weekly figures therefore often drive oil pricing and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it’s published, and just as it’s watched & believed to be reasonably reliable by most everyone in the industry…(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil supply, see this EIA explainer….also see this March 2023 twitter thread from an EIA administrator addressing these ongoing weekly errors, and what they had once hoped to do about it).

This week’s rounded 123,000 barrel per day average decrease in our overall crude oil inventories came as an average of 629,000 barrels per day were being added to our commercial stocks of crude oil, while 753,000 barrels per day were being pulled out of our Strategic Petroleum Reserve, the twenty-first consecutive Iran war related withdrawal from the SPR, including the four largest draws in SPR history, which left the SPR level at 293,426,000 barrels, the lowest since it was initially being filled in December 1982….Further details from the weekly Petroleum Status Report (pdf) indicated that the 4 week average of our oil imports rose to 6,453,000 barrels per day last week, which was 1.2% more than the 6,379,000 barrel per day average that we were importing over the same four-week period last year, while the four week average of our exports rose to 3,569,000 barrels per day last week, which was 2.2% more than the 3,491,000 barrel per day average that we were exporting last year year at this time… This week’s crude oil production was reported to be 25,000 barrels per day higher at 13,830,000 barrels per day as the EIA’s estimate of the output from wells in the lower 48 states was 6,000 barrels per day higher at 13,407,000 barrels per day, while Alaska’s oil production was 19,000 barrels per day higher at 423,000 barrels per day…US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was 5.6% higher than that of our pre-pandemic production peak, and was also 42.6% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021.

US oil refineries were operating at 97.2% of their capacity while processing those 17,395,000 barrels of crude per day during the week ending August 14th, up from 96.2% the prior week, and matching the highest refinery utilization rate since September 2018, which was also hit three weeks earlier….the 17,395,000 barrels of oil per day that were refined that week were 1.1% more than the 17,208 ,000 barrels of crude that were being processed daily during the week ending August 15th of 2025, but were 1.7% less than the 17,702,000 barrels that were being refined during the pre-pandemic week ending August 16th, 2019, when our refinery utilization rate was at 95.9%, which was close to the pre-pandemic normal utilization rate for this time of year…

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

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

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

Finally, after the increase in our oil exports and the decrease in our oil imports, the big withdrawal from the SPR meant that our commercial supplies of crude oil in storage rose for the 14th time in twenty-six weeks, and for the 27th time over the past year, increasing by 4,405,000 barrels over the week, from 424,410,000 barrels on August 7th to 428,815,000 barrels on August 14th, after our commercial crude supplies had increased by 17,423,000 barrels over the prior week….After this week’s increase, our commercial crude oil inventories were near the recent five-year average of commercial oil supplies for this time of year, while they were about 28% above the average of our available crude oil stocks as of the second weekend of August over the 5 years at the beginning of the past decade, with the difference between those comparisons arising because it wasn’t until early 2015 that our oil inventories had first topped 400 million barrels. After our commercial crude oil inventories had jumped to record highs during the Covid lockdowns in the Spring of 2020, then jumped again after February 2021’s winter storm Uri froze off US Gulf Coast refining, but then fell sharply due to increased exports to Europe following the onset of the Ukraine war, only to jump again following the Christmas 2022 refinery freeze-offs, changes in our commercial crude supplies had been less extreme up until the onset of the Iran war, when they were initially built up to a three year high by mid-April…However, after falling sharply over the past three months until last week, our commercial crude oil inventories as of August 14th were 1.9% above the 420,684,000 barrels of oil we had in commercial storage on August 15th of 2025, and were 0.7% more than the 430,678,000 barrels of oil that we had in storage on August 16th of 2024, but 2.5% less than the 439,662,000 barrels of oil we had left in commercial storage on August 11th of 2023…

This Week’s Rig Count

The US rig count decreased by five over the week ending August 21st, as the number of rigs targeting oil was down by three, the count of rigs targeting natural gas was down by one, and miscellaneous rigs were down by one…for a quick snapshot of this week’s rig count, we are again including below a screenshot of the rig count summary table from Baker Hughes…in the table below, the first column shows the active rig count as of August 21st, the second column shows the change in the number of working rigs between last week’s count (August 14th) and this week’s (August 21st) count, the third column shows last week’s August 14th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday of the same week of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting period a year ago, which in this week’s case was Friday, the 22nd of August, 2025…

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

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

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

The consumer price index was 0.1% higher in June, as higher prices for rent, utilities, used cars and trucks, vehicle maintenance and repairs, eating out, medical care, college tuition, air fares, public transportation, clothing, appliances, computers, smartphones, telephone services, video equipment including TVs, video rentals, and trash collection were partly offset by lower prices for fuel, groceries, lodging away from home, car and truck rentals, motor vehicle fees, auto, home, and health insurance, bank services, tax preparation, drugs and medical supplies, and admissions to sporting events….the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the weighted average of seasonally adjusted prices for consumer goods and services was 0.1% higher in July, after being 0.4% lower in June, 0.5% higher in May, 0.6% higher in April, 0.9% higher in March, 0.3% higher in February, 0.2% higher in January, 0.3% higher in December, after being 0.2% higher the two months ending in November 0d 2025, 0.3% higher in September, 0.3% higher in August, and 0.2% higher in July of last year…. The unadjusted CPI-U index, which was originally set to have prices of the 1982 to 1984 period equal to 100, actually fell from 333.952 in June to 333.918 in July, which left it 3.364825% higher than the index reading of 323.048 from July of last year, which is reported as a 3.4% year over year increase, down from the 3.5% year over year increase that was reported for June, with that widely cited year over year change simply reflecting the effect of last July’s +0.2% increase dropping out of the comparison and being replaced by the current month’s +0.1%, and not telling us anything more about inflation beyond that….with just slightly higher prices for food and much lower prices for energy this month, seasonally adjusted core prices, which exclude both food and energy, were 0.2% higher over the month, as the unadjusted core price index rose from 336.882 in June to 337.133 in July, which left the core index 2.478266% ahead of its year ago reading of 328.980, which is reported as a 2.5% year over year increase, down from the 2.6% year over year core price increase that was reported for June, and well below the 6.6% annual increase reported for September 2022, which had been the largest annual increase in core prices in forty years…

The volatile seasonally adjusted energy price index was 1.5% lower in July, after being 5.7% lower in June, 3.9% higher in May, 3.8% higher in April, 10.9% higher in March, 0.6% higher in February, 1.5% lower in January, 0.3% higher in December, 1.1% higher in November, 1.5% higher in September, 0.7% higher last August, and 1.1% lower last July,  and is still 14.7% higher than in July of a year ago….the price index for energy commodities was 2.9% lower in July, on a 2.9% decrease in the price index for gasoline and a 1.7% decrease in the price index for fuel oil, while the price index for “other energy commodities”, including propane, kerosene, and firewood, averaged out to be 0.1% higher….meanwhile, the price index for energy services was 0.3% higher, after falling 0.7% in June, as the price index for utility gas service was 0.7% higher in July, and is still 4.3% higher than it was a year ago, while the electricity price index was 0.1% higher, after falling 1.0% in June…. energy commodities are still averaging 24.7% above their year ago levels, with gasoline prices averaging 24.6% higher than they were a year ago, while the energy services price index is up 4.3% from last July, as electricity prices are still averaging 4.2% higher than a year ago…

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

This report also showed the price index for intermediate processed goods was 1.2% lower in July, after being 1.1% lower in June, 2.9% higher in May, 2.7% higher in April, 3.0% higher in March, 1.5% higher in February, 0.1% higher in January, 0.1% higher in December, 0.6% higher in November, 0.1% lower in October, 0.2% higher in September, 0.4% higher last August, and 0.7% higher last July….the price index for intermediate energy goods fell 3.1% in July as refinery prices for gasoline fell 5.7%, refinery prices for No. 2 diesel fuel fell 6.7%, refinery prices for jet fuel fell 15.2%, and producer prices for natural gas liquids were 9.8% lower….at the same time, the price index for intermediate processed foods and feeds fell 0.5%, as the producer price index for prepared animal feeds fell 1.4%, the producer price index for meats fell 1.7%, the producer price index for refined sugar and byproducts fell 1.5%, and the producer price index for dairy products was 0.3% lower… on the other hand, the core price index for intermediate processed goods less food and energy goods was 0.1% higher, as the producer price index for industrial gases rose 2.1%, the producer price index for paper boxes and containers rose 1.9%, the producer price index for softwood lumber rose 8.2%, the producer price index for switchgear, switchboard, and industrial controls equipment rose 1.5%, the producer price index for steel mill products rose 3.9%, and the producer price index for nonferrous foundry shop products was 2.0% higher….average prices for intermediate processed goods are still 9.9% higher than in July 2025, the 21st year over year increase in 41 months, but are way off the 26.6% year over year increase of November 2021, which had been a 46 year high…

Meanwhile, the price index for intermediate unprocessed goods fell 1.8% in July, after falling 6.4% % in June, rising 3.2% in May and 1.7% in April, falling 0.2% in March, rising 5.9% in February, rising 4.3% in January, and 2.1% in December and 2.4% in November, after falling 1.3% in October, falling 0.5% in September, and falling 1.8% last August….that was as the July price index for crude energy goods fell 7.4%, as crude oil prices fell 11.9%, unprocessed natural gas prices rose 10.4%, and coal prices were 1.2% higher… meanwhile, the price index for unprocessed foodstuffs and feedstuffs was 0.7% higher, as the producer price index for wheat rose 9.3%, the producer price index for corn rose 16.7%, the producer price index for oilseeds rose 9.5%, and the producer price index for hay and hayseeds was 12.7% higher….at the same time, the index for core raw materials other than food and energy materials was 1.6% higher, on an 11.0% increase in the price index for raw cotton, a 5.8% increase in the price index for aluminum base scrap, and a 1.5% increase in the price index for iron and steel scrap….this raw materials price index is still 7.1% higher than a year ago, the 17th year over year increase in the past 42 months, which followed a run of twenty-seven consecutive year over year increases, which came after the annual change on this index had been negative from the beginning of 2019 through October of 2020…

Lastly, the price index for services for intermediate demand was 0.3% higher in July, after being 0.7% higher in June, 0.4% higher in May, 0.9% higher in April, 0.1% higher in March, 0.3% higher in February, 0.6% higher in January, 0.6% higher in December, 0.2% higher in November, 0.4% higher in October, 0.3% higher in September, unchanged last August, and 0.6% higher last July.…the price index for intermediate trade services was 0.7% higher, as margins for metals, minerals, and ores wholesalers rose 5.5%, margins for intermediate automotive parts, including tire retailers, rose 6.6%, and margins for intermediate food wholesalers rose 3.2%….on the other hand, the price index for transportation and warehousing services for intermediate demand was 0.5% lower, as the intermediate price index for truck transportation of freight fell 1.8%, the intermediate price index for air transportation of freight fell 1.6%, the intermediate index for air mail and package delivery services, excluding by USPS, fell 1.9%, and the intermediate index for transportation of passengers was 3.4% lower….meanwhile, the core price index for intermediate services other than trade, transportation, and warehousing services was 0.6% higher, as the intermediate price index for securities brokerage, dealing, investment advice, and related services rose 3.1%, the intermediate price index for portfolio management rose 6.5%, the intermediate price index for internet advertising time sales rose 4.9%, and the intermediate price index for executive search services was 9.6% higher….over the 12 months ended in July, the price index for services for intermediate demand was 5.1% higher than it was a year earlier, the sixty-ninth consecutive annual increase in this index, after it had briefly turned negative year over year at the onset of the pandemic, from April to August of 2020, even as the current annual increase is still lower than the record 9.5% year over year increase that was indicated for July 2021…

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

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

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

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

Existing Home Sales Fell 1.7% in July on Lower Prices

The National Association of Realtors (NAR) reported that their seasonally adjusted count of existing home sales fell 1.7% from June to July, projecting that 4.06 million homes would sell over an entire year if the July home sales pace were extrapolated over that year, a pace that was still 0.7% above the annual sales rate projected for July of a year ago….June home sales were revised from the 4.09 million annual rate shown in last month’s report to a 4.13 million rate, but were still down 1.4% from May….the NAR also reported that the median sales price for all existing-home types was $434,100 in July, 0.2% higher than in July a year earlier, which they report marked “the 37th consecutive month of year-over-year price increases.“…..the NAR press release, which is titled “NAR Existing-Home Sales Report Shows 1.7% Decrease in July“, is in easy to read plain English, so if you’re interested in the details on housing inventories, cash sales, distressed sales, first time home buyers, etc., you can easily find them in that press release….since sales of existing properties do not add to our national output, neither these home sales nor the prices for which these homes sell are included in GDP, except insofar as real estate, local government and banking services are rendered…

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

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