Crude, Distillate, and Gasoline Inventories - Dec. 29th 2022

Weekly EIA report.

Crude stocks went up 718K barrels, from last week; Distillates up 283K Barrels; and Gasoline slid -3.1M barrels. The SPR slid another -3.5M barrels.

Inexplicably, gasoline consumption within the U.S., has risen for 2 consecutive weeks. This report is through 12-23, so the impacts of the winter storm would not be fully reflected in these numbers. Although there are people, such as myself, that made sure the tank was topped off.

The national average, per AAA, has risen +5.8¢ the past week. How much is due to the winter storm and refinery struggles... not really sure. There is a slight upward bias in gasoline pump prices.

Distillate stocks continue to slip in the New England region. Again, this data was pre blizzard and the blast of cold arctic air. 

A month ago, the news out of New England was dire, in regards to heating fuel and natural gas. 

On a side note, I was once an avid UK Wildcat BB fan, but slowly discontinued my allegiance, when the marketing major shifted the brand= to Cal's Cats. Last night, I decided to check out some twitter feeds about them and somehow the Twitter algorithm thinks I am once again an avid fan. Geez!

Natural Gas Report, Dec. 24, 2022

The Energy Information Administration released their weekly report Thursday, and I am just now getting around to commenting, and given the current climate, could be old news.

Such as the latest storage being from 12-16.

This paints a picture of almost normal for everywhere, except the West Coast. It will be a couple of reports, before a clearer picture of this current winter storm's impacts. BUT, the futures market seems to be ignoring these storms. Possibly due to the short duration. It's hard to believe, but temps will rebound to normal and above normal temps... by New Year's.

The futures market has dropped from last week. And I do mean... massively dropped. Why? Supply outpacing demand, would be one explanation... but why? Until I can grasp the why, I have to believe a rapidly slowing demand is the reason. Again... why?

I am talking about storage levels and demand to refill. The answer seems kind of obvious, when considering inventory levels and demand. It is likely felt that we have enough in storage to withstand this winter's demand, which means a lowering of stocks going into summer. 

That would be the normal cycle, except... what about next winter and the build of inventory?

I guess we should enjoy this while we can. Consider it the calm, before the next storm!

Crude, Distillate, and Gasoline Inventories - Dec. 21st 2022

Weekly EIA report.

Crude stocks slid -5.9 M barrels, from last week; Distillates slid -242K Barrels; and Gasoline increased +2.5M barrels. The SPR slid another -3.6M barrels.

Refining operation eased this past 4wk. average, although gasoline supplies increased. The loss seems to be in distillates. 

Gasoline consumption ticked up this week by 1.0% from last week after a month of declines. It is currently at -8.2% compared to same time last year. Gasoline, according to AAA, has declined -10.6¢ from last week. 

Diesel in New England, still remains on the low side and is declining from last week. This cold snap will change the numbers, imo. 

Not sure if gasoline prices will continue to slide, or when the draw on SPR numbers will stop, etc. 

Natural Gas Report, Dec. 15, 2022

The Energy Information Administration released their weekly report today...

Continues to hold inventories above mid range of 5 year maximum and minimum. Regionally... a bit different story...

Mountain and Pacific regions experienced some drops, week to week and down from one year ago. That storm hitting into the west, is now moving hard into the east, so I would expect some drops in more regions on next week's report.

Overall, prices have edged up on UKG and TTF, with U.S. futures jumping about 9.5%.

Overall, that percentage is still in a rather narrow band, as is UKG and TTF. Forward looking, does not see an let up, as EU and UK reserves will likely be quite slim, by spring. A lot of Russian natural gas was used to build up those reserves, prior to NordStream being curtailed and then shut down. 

Not sure who will fill that gap in the 2023 runup to next winter. I would expect U.S. natural gas prices to shoot up during this period, as more LNG Tankers and Processing capacity comes on line. Then there is the matter of Russian LNG, which is still getting to the market, and quite possibly more than what the U.S. is shipping. Highly likely, it is more. 

While that might infuriate some, it would ease the run up of prices in U.S. Natural Gas.

Take your pick!

What To Make of the November Retail Trade Report

ADVANCE MONTHLY SALES FOR RETAIL AND FOOD SERVICES, NOVEMBER 2022 

Advance estimates of U.S. retail and food services sales for November 2022, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $689.4 billion, down 0.6 percent (±0.5 percent) from the previous month, but up 6.5 percent (±0.7 percent) above November 2021.

Total sales for the September 2022 through November 2022 period were up 7.7 percent (±0.5 percent) from the same period a year ago. The September 2022 to October 2022 percent change was unrevised from up 1.3 percent (±0.2 percent).

Retail trade sales were down 0.8 percent (±0.5 percent) from October 2022, but up 5.4 percent (±0.7 percent) above last year. Gasoline stations were up 16.2 percent (±1.6 percent) from November 2021, while food services and drinking places were up 14.1 percent (±3.0 percent) from last year.

The biggest losers for the month...

• Department stores
• Furniture & home furn. Stores
• Motor vehicle & parts dealers
• Building material & garden eq. &
• Electronics & appliance stores
  

Moderate Losers for the month...

• Non-store retailers
• Sporting goods, hobby, musical instrument, & book stores

There seems to be a bit of concern, as the sales rate fell more than anticipated. How much is seasonal and how much is consumers pinching pennies? 

• We knew, or should have known, that Motor Vehicles were slowing, especially in the used car market, with lower prices. 
• Building materials, etc. would seem likely to slip this time of year.

When we consider this release as being current dollars and then adjust for real dollar purchases... the line has been fairly flat for several months. Compared to last year in "inflation adjusted" dollars, this month is -0.2%. 

Of course, we must always remember that data may be adjusted in following months, as more data becomes available. So everything I have mentioned is based on incomplete data. Not very helpful, in my humble opinion, but the best available information. 

I don not understand the hoopla around this report. 

Crude, Distillate, and Gasoline Inventories - Dec. 14th 2022

Weekly EIA report.

Crude stocks rose 10.2 M barrels, from last week; Distillates increased another +1.3M Barrels; and Gasoline increased +4.5M barrels. The SPR slid -4.8M barrels.

Refining continues at a high rate of efficiency, as the inventory gasoline, distillates, etc. continued to grow. Even in spite of continued high exports of gasoline. Gasoline consumption slipped -9.5% from year ago levels on the 4 week average and another -1.8% from previous week's average, to a level of last February.

Pump prices continue to fall and might just make that $3 national average at Christmas. However, I may just fill up the tank this weekend, as I think the floor is near in regards to that national average, in my humble opinion. ($3.08? Which is 13¢ above my estimate last week)

The overall is in decent shape, year over year, but a couple of areas are still under stress. While I am not showing a graph of the significant drop in distillate consumption, it does raise the question of why is both gasoline and diesel consumption dropping so much in December, instead of the usual late January to February slump?

Along with that thought, is the impact energy has on the overall inflation picture and what happens when it bottoms and begins to rise again? But then, why is it falling so much at this point? Lower consumption? Great, but why?

I always hear about how the FED watches this report, or that report, etc. I found it odd, that no mention was made of the FED's own Median CPI. It was 7.0%, year over year, just like last month. NO CHANGE! Am I believe the FED creates a report, that they do not watch?

I have so many questions.

CPI DATA and Real Earnings, December Reports 2022

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

Last month, I projected this...

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? 

The answer to the question is yes. 

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1 percent in November on a seasonally adjusted basis, after increasing 0.4 percent in October, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 7.1 percent before seasonal adjustment.

The index for shelter was by far the largest contributor to the monthly all items increase, more than offsetting decreases in energy indexes. The food index increased 0.5 percent over the month with the food at home index also rising 0.5 percent. The energy index decreased 1.6 percent over the month as the gasoline index, the natural gas index, and the electricity index all declined.

The past 5 months (June to November) has been at an annualized rate of +1.13%. For comparison, the previous 5 months of January through June was an annualized rate of +12.94%. A major improvement in inflation, although it could be due to lower demand. Have to wait and see. 

For the first time in quite a long time, my monthly change was negative. Using the aforementioned 5 month ranges, the last 5 months was at annualized +1.41%, compared to prior 5 month annualized, of +10.94%. For year over year, My CPI stands at +6.7%

Hourly earnings have just about caught up with pre covid earnings. Real Earnings

I have done such a bang up job on predictions, I will not make any bold predictions for the future, although significant easing of energy prices is underway... although I suspect that might come to an end very soon. 

 

The Good and the Bad of Today's PPI Release... December 9th, 2022

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

The Producer Price Index for final demand advanced 0.3 percent in November, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices also rose 0.3 percent in both October and September. (See table A.) On an unadjusted basis, the index for final demand moved up 7.4 percent for the 12 months ended in November. 

A little further in the report...

Product detail: The November advance in prices for final demand goods was led by a 38.1-percent jump in the index for fresh and dry vegetables. Prices for chicken eggs; meats; canned, cooked, smoked, or prepared poultry; and tobacco products also moved higher. Conversely, the gasoline index fell 6.0 percent. Prices for diesel fuel, residential natural gas, and primary basic organic chemicals also declined. [emphasis added]

Overall, a very good report, unless you are below average income. Which means food prices are not slowing anytime soon. Across the board, the total goods less foods and energy inputs is down, by an average of -0.3%, compared to -0.1% last month. Good news, with the energy components down -4.25%, compared to -3.2% last month. However, with energy down -4.25% and the total good, ex-F&E at -0.3%... guess what? Food jumped +0.4%, whereas last month it was down -3.2%.

Drought conditions are pushing up several categories. If the drought were to end tomorrow, it would still take several months to restock the supply chain. In the interim, expect grocery prices to continue upward, regardless of FED easing or tightening. 

If you are above average income and/or investing in stocks, etc., this report is indeed good news. On the other hand, if you are below average income, this report indicates some bare cupboards in the offing, in my humble opinion.

Remember most of the harvest is now in the bins, with feedstocks for livestock known and those livestock mostly culled to match that over winter feedstock. 

The outlook is not positive for a reduction in food inflation. Will energy prices continue to fall into the coming year? 

Natural Gas Situation in the United States

The Energy Information Administration released their weekly report today...

Nationally, not too bad for inventories, although some areas being lighter than others. 

Prices have slipped a bit over the past couple of weeks, which is good news.

Now for a mixture of international politics and trade. Europe has been screaming from the rooftops about the new U.S. legislation that benefits U.S. based manufacturers. If there was not a war in Ukraine, would that be such a "major" issue?

Much of Europe's industrial strength was derived from cheap Russian energy imports, especially natural gas. Since the invasion, prices of natural gas has mushroomed, with new contracts being written at much higher costs to European industry. Futures indicate this will continue for a couple of more years, at a minimum.

As a result, many European companies can no longer compete with the U.S. on a cost per unit basis and have publicly stated that moving of operations is a viable alternative. This is the hollowing out of the European industrial base, that is sometimes mentioned.

The new U.S. legislation may indeed have some WTI violations and may receive some minor "tweaks", but the uproar is a smokescreen to cover for what is about to transpire. European companies, heavily dependent on natural gas, will being shifting to the U.S., or somewhere with cheaper natural gas. 

Every good politician understands the importance of blame assignment. In this case, they are diverting the public's attention to a small blip in a trade document, and hope the public continues to blame the U.S. as their industrial based is hollowed out... due to high energy prices. Let's face it... many Europeans already blame the U.S. for everything bad that happens to them.

Certain publications that serve as mouthpieces for those countries' governments, are beating that drum really hard. 

Buckle up... It will be interesting, in my humble opinion.

Crude, Distillate, and Gasoline Inventories - Dec. 7th 2022

Another weekly EIA report.

Crude stocks fell another -5.1 M barrels, from last week; Distillates increased another +6.1M Barrels; and Gasoline increased +5.2M barrels.

SPR slipped -2M barrels since last week's estimate, but the Crude, Petroleum, Petroleum Products + SPR gained 4M barrels. 

Refining continues at a high rate of efficiency, as the inventory gasoline, distillates, etc. continued to grow. Even in spite of continued high exports of gasoline. Gasoline consumption slipped -7.8% from year ago levels on the 4 week average and -1.8% from previous week's average.

The national average for gasoline has slid -4.0% from last week and +1.5% above same time last year, which mirrors WTI crude from one year ago. 

Last week, I commented about my doubt of pump prices falling to the $3 level by Christmas. I was wrong and am happy about that incorrectness. I can now see it in the $2.95 nationally. The why is surprising to me, with consumption falling as fast as it is. Not sure what to make of that. 

Of course, my glass is half empty mindset, leads me to think bad thoughts. Best I can do, is hope for the best, but prepare for the worst.

Distillates and Diesel...

While there was some improvement, certain areas, such as New England... is not fully whole. No doubt the reason for this is being politicized, I am a bit wary of the motivations of behind the scenes actors... in regards to all this. Basically, A truth is not the same as the whole truth. A fact is not the same... as all the facts. 

Incomplete Data and Hyperbole!!

The BEA released the Personal Income and Outlays, October 2022, this morning..

I have highlighted the adjustments from last month's release. 

You can scroll down on each month's release to examine the adjustments. It is not uncommon to have these revisions, as they are estimates and with the arrival of more data, the estimates can be further refined. Sometimes, this can result in adjustments going back a few month, as indicated by the numbers underlined in red.

In other words... the estimate is based on incomplete data. What astounds me, is the hyperbole surrounding this single report, or any other, as some signal from God... that some FED reversal is imminent. 6.0% is triple a target of 2.0%. At least it used to be, in the days before FTX.

Yes, I understand the one month PCE ex F&E was 2.7% annualized. This past July, saw that figure at 0.8% annualized. So hush! The FED probably uses a lot of data points, as well as one of those magic eight balls.

Overall inflation rates are improving across the board and it is not impossible that a more normal rate of inflation could be upon us by next summer, based on current progression. However, is that due to recessionary pressures, Federal Reserve actions, global intrigue... or any combination? 

I dunno!