Crude, Distillate, and Gasoline Inventories - Nov. 30th 2022

Another weekly EIA report.

In a nutshell, Crude stocks fell -12.5M barrels; Distillates increased +3.5M Barrels; and Gasoline increased +2.7M barrels.

Gasoline consumption is slowing and after a slight rise a few weeks back... is resuming the downward trend. The price at the pump is also falling, although exports are keeping the prices from falling any faster. (See above chart for gasoline imports/exports) 

I have been reading reports of the national average falling below $3 by Christmas. I can see an average of $3.15, but any more is doubtful, imo. 

On the other hand, some hysteria over more potential OPEC+ cuts, a sudden drop in the dollar, and whatever the EU is about to do... will cause big problems in the energy market. Yet the futures seems to be holding steady. 

My guess is hysterical headlines make for great click bait. 

Quick Take on GDP Revision

 The BEA release.

Real gross domestic product (GDP) increased at an annual rate of 2.9 percent in the third quarter of 2022 (table 1), according to the "second" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP decreased 0.6 percent.

The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month.  In the advance estimate, the increase in real GDP was 2.6 percent. The second estimate primarily reflected upward revisions to consumer spending and nonresidential fixed investment that were partly offset by a downward revision to private inventory investment. Imports, which are a subtraction in the calculation of GDP, decreased more than previously estimated (refer to "Updates to GDP").

That is good news, except when delving into the details, although still not so bad... just not so optimistic going forward. 

              

Considering the size of PCE relative to overall GDP, the increase is more a product of overstating the advance GDP's drop in that category. Which is a good sign, if PCE is easing back into the traditional range and all the other categories begin pulling their weight.

It should be noted, however, that consumer spending has increasingly become a greater share of the GDP. How long can that continue?

 

Diesel and Gasoline, Nov. 23, 2022

 Another round of data from the EIA.gov...

Crude Inventories slipped -3.7M barrels, with distillates up +1.7M barrels and gasoline up +3.0M barrels. Prices did slip in all categories the past week.

Consumption slipped as well, after moving up two weeks straight.

Even distillate stocks edged up in all areas, except the left, er... west coast.

A lot seems to be hinging on December the 5th, and price caps. Not sure how that will work, or if it will work. It seems, it was telegraphed too far in advance and the opponent has been preparing a counter.

There is still 390.5M barrels of crude in the SPR, down -257.6M barrels from two years ago, or -39.7%. 

Of course, how much of that 390.5M barrels remaining is usable... is not fully known. It is stored in salt caverns and there will be some spoilage. 

I Voted, But My Rationale Was Probably Different Than Yours

I have long considered the likelihood of media manipulation of the 2016 election. I don't think there was vote fraud, or at least to the extent to alter the election results for 2016 or 2020. I should explain myself. 

I was somewhat puzzled in early 2016, when the center left of the mainstream media, really amped up the noise around a Trump campaign. Afterall, it was a "joke" campaign. However, that "joke" campaign started to erode the legitimacy of more convention Republican candidates, which would be of benefit to those same center left media companies, specifically those... well left of center organizations.

This managed to propel Trump into the republican nomination, which was certain to end in defeat to Clinton. They were so certain of a Clinton victory, it was deemed necessary to show some "balance" by promoting news, that was harmful to Clinton. This was all okay, as Clinton could not conceivably lose.

Yep, there were some shocked people in those newsrooms. It was important to rectify their mistakes by immediately pointing fingers at everyone else. That continued through the 2020 campaign, and finally Trump was ousted. Not by much, as a few thousand votes in certain states could have given Trump victory, just like a swing of a few thousand votes in 2016, would have given Clinton victory.

It is very clear that Trump was a drag on what should have been a victory dance in 2022, for the republicans. The democrats need Trump running loose, to be able to win in 2024. If you cannot see this trap, then you are blind. Basically, Trump needs to sit down and hush, for the republicans to have a shot in 2024.

The democrats need Trump to be front and center, for them to feel good about 2024. That's why I voted to keep Trump banned on twitter. 

Every time Trump tweets, the lamestream media will pounce on it, rebroadcast it, make political hay of it... just to keep Trump in the minds of voters, even ones that are trying to forget him.

Then there is the curious case of Biden. Democrats do not need Biden in 2024. That he was the best the democrats could do in 2020, is a testament to their horrid track record of developing worthwhile candidates. Lest we forget... the republicans gave us Trump. We have to be nearing rock bottom for choices to be between Biden and Trump.

It is time to turn it over to younger people of both parties. Let's start with... say less than 75!!!😎

Is There a Natural Gas Shortage In the US?

Not if today's report from EIA.GOV is any indication.

Current natural gas in underground storage, matches last year's figure. Of course, the regional differences might an issue.

While it might look good, it should be noted that storage is not sufficient to last through the winter for the East, and especially the Northeast. Pipeline constrictions limit the resupply, which results in requiring LNG. The latter is a political hot potato. Be wary of which side of any argument you might feel inclined to side with. 

Each side has an agenda and while we want to focus on the truth... sometimes the truth is not the whole truth. 

An example of how facts and truths can be spun. 

• The earth was 94.5 Million miles from the sun in July.
• The earth will be 91.4 Million miles from the sun this coming January.

Both of those statements are true and factual. Taking those two statements alone, could result in some wild claims about the earth crashing into the sun in less than 15 years, which is not true or factual. 

The point being... there is a lot more truth to be uncovered, to find the whole truth, and nothing but the truth. So be wary of some of those truths being bandied about.

Okay, on to natural gas futures...

One thing is for certain... consumer costs for heating will go up this winter. Energy inflation is still a thing, even if gasoline prices are slipping. 

Diesel and Gasoline, Nov. 16, 2022

Another week, another data dump from EIA.Gov.

Crude inventory slipped -5.4M barrels; Distillates up +1.1M barrels; Gasoline up +2.2M barrels. Prices for barrels of WTI, slid -3.65; Highway diesel eased -2¢ per gallon; residential heating oil was down -10.8¢ per gallon; and gasoline was down -3.4¢ per gallon. 

Gasoline consumption, seems to be heading up and possibly moving above the 3 month moving average at current pace. Why it is happening, is beyond my scope of knowledge, although the retail numbers from today, seem to support an increase in gasoline consumption. Maybe with cold weather, people are warming up their cars, before driving.

Diesel seem to still be an issue, as inventories remain low, especially in the Northeast.

I would suggest that areas other than the northeast, may slowly build, as agricultural usage should begin to ease with the bulk of crops being harvested. It should be noted the dry weather in many of these areas have accelerated harvest and the need for drying the crops down has been reduced. 

Not sure that is the reason for propane stocks rising, but works for me, as inventory is well above this time last year.

I did add politics as a tag, but I won't say anything until this election is finally over. Does anyone know when that will be. 😎

Retail Trade Still Holding Up, In Many Areas, But Not All

ADVANCE MONTHLY SALES FOR RETAIL AND FOOD SERVICES, OCTOBER 2022

Advance estimates of U.S. retail and food services sales for October 2022, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $694.5 billion, up 1.3 percent (±0.5 percent) from the previous month, and 8.3 percent (±0.7 percent) above October 2021. Total sales for the August 2022 through October 2022 period were up 8.9 percent (±0.5 percent) from the same period a year ago. The August 2022 to September 2022 percent change was unrevised from virtually unchanged (±0.2 percent)*.

Retail trade sales were up 1.2 percent (±0.5 percent) from September 2022, and up 7.5 percent (±0.7 percent) above last year. Gasoline stations were up 17.8 percent (±1.6 percent) from October 2021, while food services and drinking places were up 14.1 percent (±3.2 percent) from last year.

Winners were broad based, but there were some losers, as in reduced sales in constant dollars...

• Department Stores
• Sporting goods, hobby, musical instrument, & book stores
• Electronics & appliance stores
• Clothing & clothing accessories stores

There was one, that did not keep pace with inflation, or slipped in "real" dollars.

• Miscellaneous store retailers

Not sure how the consumer is managing to keep up this pace of spending, which is at the February ~ April 2022 pace in "real" dollars. (Still not at the level of March ~ April 2021, in "real" dollars).

I can only speculate that consumers are going credit crazy. I have thought that for awhile and keep expecting the consumer to slow purchasing, as interest rates are edging up. 

I guess that whole "buy now, pay later" mantra hasn't gotten to the "later" part. 

Is PPI cooling for the Average Person? October 2022, PPI Release

The BLS has released the October Producer Price Index Report. (historical releases)

The Producer Price Index for final demand increased 0.2 percent in October, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.2 percent in September and were unchanged in August. On an unadjusted basis, the index for final demand advanced 8.0 percent for the 12 months ended in October. 

You can read it all at the link, but this caught my eye...

Product detail: In October, 60 percent of the increase in prices for final demand goods is attributable to the index for gasoline, which rose 5.7 percent. Prices for diesel fuel, fresh and dry vegetables, residential electric power, chicken eggs, and oil field and gas field machinery also advanced. In contrast, the index for passenger cars declined 1.5 percent. (In accordance with usual practice, most new-model-year passenger cars and light motor trucks were introduced into the PPI in October. See Report on Quality Changes for 2023 Model Vehicles at www.bls.gov/web/ppi/ppimotveh.htm.) Prices for gas fuels and for processed young chickens also fell.

All in all a seemingly good report, as long as you avoid the food and energy section, and focus on services, which slid.

Just to clarify, a slowing of inflation does seem to be in the offing, but slowing does not mean reversal. Also, food and energy will still be an issue for us poorer folks through this winter. 

BRRR!

Natural Gas Stats Nov-11-2022

The weekly update from the EIA.

Working natural gas in storage in the Lower 48 states as of October 31, 2022, totaled 3,531 billion cubic feet (Bcf), according to month-ending estimates based on EIA’s Weekly Natural Gas Storage Report released November 10. This total is the second-lowest end-of-refill-season inventory level since 2008. Total inventory as of October 31 was 115 Bcf (3%) less than the five-year (2017–21) end-of-October average and 104 Bcf (3%) less than last year at this time.

Click on images to enlarge

Overall at the mid range of 5 year average... the problem is in the East.

That would suggest some improvement. However, on a five year average...

Of course, this is the east, but not specifically the northeast, where the real problem seems to lie. There is a debate on how to handle this, but I lean toward this guy's idea. It is a 23 minute video, but seems to clear the air, on what is happening... and a potential solution. 

It should be noted, the dollar has sank about 6.7% from 6 weeks ago. The average annual household energy range for the U.K., back in July was £3,600~£5,400. It now stands at the £2,300~£2,950 range, so significant improvement, although a far cry from 2 years ago. Still that £2,500 cap, takes on a whole different look at this point in time. 

In the U.S., I would expect a 20% jump for households, on top of what is already in place.

CPI DATA and Real Earnings, November 2022

The BLS report was released this morning and it was a surprise. (historical releases) It came in substantially under the forecast by everyone.

My forecast from last month...

Oh yeah... next month CPI at 8.1%~8.2%, with m/m of +0.8%.

As you know by now...

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4 percent in October on a seasonally adjusted basis, the same increase as in September, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 7.7 percent before seasonal adjustment.

Of course, just as their is a silver lining inside every dark cloud, there can be a dark lining inside a silver cloud. Such as the month over month of July, at -0.01%; August at -0.04%; September at +0.22%; and this report (October) at +0.41%. Still not bad. 

My month over month was +0.08% and annual at 7.41% after last month's +0.33% mom and annual at 8.08%. For me, food somewhat decreased and medical stayed mostly flat. 

Hourly earnings have still not recover to pre-pandemic levels. Which is a nice way of saying wage inflation has not kept up with the CPI. Real Earnings

I over estimated inflation for October, so here is hoping I over shoot in November. Range of 7.6%~7.9%. Sure things are moderating, but can we count on further reductions in Electricity, Utility (piped) gas service, apparel, Used cars and trucks, and Medical Care services? 

Am I an optimist, pessimist, or realist?

What's Up With Diesel and Gasoline

The election might be over, but the vote counting, and arguing will continue... until the next election. In the meantime, energy prices will continue to hit the consumer pocketbook, with little to no relief in sight. [Data derived from EIA.GOV]

So, a review of a chart, I have published since August, 2006.

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Crude inventories are up 3.9M Barrels from last week, with Gasoline down 500K and distillates down 900K. Clearly there is enough Crude, but refiners are working at a fairly high rate... to export 3.5M barrels of gasoline more than imports, over the previous week. Same for distillates, with 7.8M barrels exported over imports.

I keep hearing about demand destruction in gasoline, and yes, it is much lower than one year ago. 

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However, based on a 12 year timeline... hard to discern.

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I would suggest that consumers are more mindful of gasoline prices and consumption, but are also being hammered by various other categories, such as food, which is not slowing in the upward trajectory and then there is the "core". You have to go back a number of years to see that core at current levels.

Now to the Northeast and distillate stocks...

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Not much in the way of improvement and actually a bit of slippage. It is not unusual to see the inventory this low in New England, at the tail end of the heating season, but never this low, at this time of season... dating back to records of November, 1990.