Natural Gas Inventory Report, July 28, 2023

The Energy Information Administration released their weekly report yesterday.

The Pacific Region slipped to -8.3% from last week's -7.9% last week's numbers, although year ago numbers edged up to -13.1% from -13.4%

Across much of the West, prices increased this week, particularly in California. In the Rocky Mountain region, the price at Cheyenne Hub in southeast Wyoming rose 16 cents from $2.24/MMBtu last Wednesday to $2.40/MMBtu yesterday. In California, the price at PG&E Citygate in Northern California rose 40 cents, up from $4.89/MMBtu last Wednesday to $5.29/MMBtu yesterday. The price at SoCal Citygate in Southern California increased $6.69 from $5.64/MMBtu last Wednesday to $12.33/MMBtu yesterday.

Ouch!!

 Select inventories of EU and UK... 

It should be noted that while percent of capacity is high... that capacity is generally only about a 3 month supply. It is much better than years past, but still dependent on weather and geo-politics.

Total EU rose to 84.49%, from last week's 82.53%.

Snapshot of the past, the current and the future outlook for prices.

 

Review of June data and the July PCE Report

A story of glass half empty versus a glass half full...

For months on end, the data has contained revisions of prior months being downward, which gave that current report a glass half empty kind of vibe.

For the past two months... the previous months data has been revised upward, which emits a vibe of glass half full for the current month.

That's a positive, imho.

https://www.bea.gov/news/2023/personal-income-and-outlays-june-2023

Certainly a downward trend is in full view across the board, when mentioning inflation...

The Annual PCE, ex food and energy, is also slipping.

This is good news, as it indicates "sticky" prices are starting their downward slide. Just in time, as energy prices seem to be edging up and food prices may as well. Not everything is rosy, but optimism is not unreasonable. 

EXCEPT, next month's projections are for PCE to come in around 3.4% and core at 4.4%. Is that the last dying gasp of inflation, or signs of things to come?

Quick Review of The Advance GDP report 2Q-2023

First off... a screen shot with some additions.

The report has some positives and some concerns. I would agree with the media reports of Gross private domestic investment carrying the load for the quarter, but is it sustainable... given recent slides and spikes.

I am a bit concerned about the Personsal Consumption Expenditures category, as it gives the appearance of losing steam. As the 70.7% indicates... it is a large part of the economy. It did gain, but lagged the overall. Additionally, the was quite a drop from 1Q performance, which itself was stellar... compared to previous recent quarters.

The trade deficit is weighing as heavily as some recent reports and is back into 2021 range. The big question is whether this will continue.

Lastly... government spending. I am a bit old fashioned, as I consider government spending as something that should match, but never exceed the overall economy... unless some dire circumstances are present. Not seeing that at present.

Gasoline consumption per latest EIA data, July 26, 2023

Gasoline prices (per AAA) rose from last report's $3.569, to $3.687. One year ago the price had fallen to $4.327, and was on its downward trajectory... into the mid September lull, around  $3.67. The current price is in line with last November's pump price.

Consumption slipped -2.2% week over week, and is +1.2% above year ago numbers. (This is a four week moving average). 

The import/export surplus of gasoline since last March 1st 2022, jumped to +105.3M barrels. That is an 1.7Mb increase over the week.

My past week prediction of a 5¢ rise in pump prices, turns out to have been optimistic, after an 11.8¢ rise. 

The current read of the cards, has a continued upward bias, with a near 6¢ increase. Hopefully, that is the extent.

I can think of many possible reasons for the rise, but they would just be speculation on my part. 

Crude and Petroleum Product Inventories - July 26 2023

Data per the EIA weekly report. 

Crude stocks fell by -600K barrels, from last week, yet remains only -0.3% from the 5 year seasonal average. It should be noted the 5 year average includes the abnormal 2020 and 2021 number. Otherwise, the current inventory is nearly +4.2% above normal.

Distillates inventory slid 245K barrels; and Gasoline inventories slid at about 800K barrels. Distillates (-13.5%,-3.2%) and Gasoline (-5.8%, -3.1%) are both below 5 year and 3 year adjusted average inventories.

The SPR halted the decline last week and remains unchanged from this report.

WTI is $78.94, compared to $75.38 (+4.8%), one week ago, and $94.65, one year ago(-16.6%).

Refinery output improved on a weekly basis, yet remains below year ago levels

For anyone interested, the U.S. has exported 771.2M barrels of crude and petroleum products, more than imported, since March 1, 2022. It jumped nearly 16.9M barrels this past week.

Overall, crude stocks remain quite healthy, compared to this time last year, with days supply at 27.8, to last year's 25.6 days.

It is 6 of one and a half dozen of the other, for the crude prices moving upward. Supposedly China's crude demand will increase, due to Government intervention, although the outcome is still in doubt. The Saudi's will reduce production starting next month, although there are reports of increased Russian exports. 

All of this was theorized in April and then prices fell. Will this be a repeat?

Natural Gas Inventory Report, July 21, 2023

The Energy Information Administration released their weekly report yesterday.

Nationally, the inventory number continue to stay above the 5 year seasonal average.

The Pacific Region continues to gain, with last week's numbers, at -7.9% vs. -9.3% of one year ago. The 5 year seasonal numbers continue to improve.

In California, the price at PG&E Citygate in Northern California rose 57 cents, up from $4.32/MMBtu last Wednesday to $4.89/MMBtu yesterday. The price at SoCal Citygate in Southern California increased $2.24 from $3.40/MMBtu last Wednesday to $5.64/MMBtu yesterday. Natural gas consumption in the electric power sector increased by 84% (1.3 Bcf/d) in California and by 10% (0.3 Bcf/d) in the desert Southwest this report week

 Select inventories of EU and UK... 

Total EU rose to 82.53%, from last week's 78.63%.

It should be noted that Gas in storage does not represent usage. An Example would be Germany has 212+ TWH in storage, but consumed approximately 847 TWH in 2022, which was a 17% decrease from 2021.

The following contains pricing information, that is based in Mmbtu and converted to US dollars for comparison purposes only. Forex is used for this comparison and should be noted that actual exchange rates on delivery may vary. 

Simply put... The EU and UK consumers do not use US Dollars, so be wary of these charts.

Snapshot of the past, the current and the future outlook for prices.

Just for comparison, the UK current pricing would suggest £1,522.06 per annum, while the 12 month high (FEB-24) would suggest £2,286.37. OFGEM has a cap around £2,047, which is line with the October futures.

Gasoline consumption per latest EIA data, July 19, 2023

Gasoline prices (per AAA) rose from last report to $3.569. One year ago the price had fallen to $4.495, and was on its downward trajectory... into the mid September lull, around  $3.67.

Consumption slipped week over week, but stands 3.8% above year ago numbers. (This is a four week moving average).

he import/export surplus of gasoline since last March 1st 2022, jumped to +103.6M barrels. It had basically remained flat for the past 3 months, until the previous week's +2.3M barrel jump, and this past week at +2.5M barrels.

The pump prices are most likely set to rise, but in the 5¢ range. This is mostly based on crack spread edging up, exports, and refinery operation rates. Take you pick.

After the ups and downs, the pattern seems to be stable in the $3.55~$3.65 range. 

Crude and Petroleum Product Inventories - July 19 2023

Data per the EIA weekly report. 

Crude stocks fell by -708K barrels, from last week, yet remains down -0.8% from the 5 year seasonal average. It should be noted the 5 year average includes the abnormal 2020 and 2021 number. Otherwise, the current inventory is nearly +3.2% above normal.

Distillates inventory edged up 13K barrels; and Gasoline inventories slid at about 1M barrels. Distillates (-13.9%,-3.5%) and Gasoline (-6.1%, -3.6%) are both below 5 year and 3 year adjusted average inventories.

The SPR halted the decline and actually increased 1K barrels. 

WTI is $75.38, compared to $75.87, one week ago, and $96.88, one year ago.

Refinery output improved on a weekly basis, yet remains below year ago levels

For anyone interested, the U.S. has exported 754M barrels of crude and petroleum products, more than imported, since March 1, 2022. It jumped nearly 9.3M barrels this past week.

Overall, crude stocks remain quite healthy, compared to this time last year, with days supply at 27.9, to last year's 25.8 days.

I have read where the talk is about crude prices jumping up and it might happen. However, how much of it is wishful thinking by crude traders? It is more satisfying to buy low and sell high... in an ever rising market.

Comparison of Inflation in selected countries- July, 2023 Edition

With the United Kingdom EUstats release of June data, I have updated my comparison graph...

Note, the USA(EU method) is directly from Eurostats.

The rate of inflation is decelerating across the board. However, the near 19%+ rise in prices, over the past 26 months is still fresh in the minds of most consumers.

There are some naysayers worried about the rapid deceleration, as sign of either a recession or possible deflation.

This seems to be based on the notion of this deceleration never happening before. Not so sure about that, as it has occurred in the past 80 years, and not always accompanied by a recession. Granted, monetary policy has been a factor, but again... such recessions were most often deemed as mild. 

But what do I know?

7-18-23, Advance Retail Sales Report for June

Advance Monthly Sales for Retail and Food Services, June 2023. 

Advance estimates of U.S. retail and food services sales for June 2023, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $689.5 billion, up 0.2 percent (±0.5 percent)* from the previous month, and up 1.5 percent (±0.7 percent) above June 2022. Total sales for the April 2023 through June 2023 period were up 1.6 percent (±0.4 percent) from the same period a year ago. The April 2023 to May 2023 percent change was revised from up 0.3 percent (±0.5 percent)* to up 0.5 percent (±0.2 percent).

Retail trade sales were up 0.2 percent (±0.5 percent)* from May 2023, and up 0.5 percent (±0.5 percent)* above last year. Nonstore retailers were up 9.4 percent (±1.6 percent) from last year, while food services and drinking places were up 8.4 percent (±2.3 percent) from June 2022.

Those figures are nominal, meaning not adjusted for inflation. Compare the nominal 0.2% monthly and 1.5% annual increase... to the CPI of 0.2% monthly and 3.0% annual. In other word, the montly was flat in inflation adjusted and -1.5% on the annual inflation adjusted.

Now for the good news... maybe.

After months of the media extolling the upward trend meeting or exceeding expectations of the Advance report, they are ho-hum to disappointed in this report.

For months, I have lamented the constant downward revisions of preceding months, which gives the appearance of meeting or exceeding expectations on the Advance Report.

However, this month's advance report shows an upward revision to both April and May... from last month. Without the upward in revision in May's numbers, the uptick would have been about +0.43%. Which is still below the expectations, but not as far below the +0.5% expected.

What does appear to be happening... is the consumer is running out of steam, and has been since January. Even the FED has picked up on this. The Census Bureau acknowledges this with their XLS download (table 2). 

Now the winners and losers...

Nonstore retailers is generally the mail order places, such as Amazon, etc. Furniture and electronics popped up as well as clothing. 

Building materials, gasoline stations, sporting goods, and surprisingly... grocery stores slid.

As stated earlier, the spending habits are simply shifting from one thing to another, with no real growth... except inflation generated.

This graph is from data taken from the St. Louis Federal Reserve (FRED) website...

Seriously, the data from every source... indicates the party is pretty much over. It will be hard to put any type of positive spin... going forward. 

Spin has been most of the business news for over a year. The realization of this condition will lead to claims of gloom and doom... which is also spin. 

The past two years have not been nirvana and the outlook going forward is not bleak. At some point the spin will moderate to reality, imho.

Natural Gas Inventory Report, July 14, 2023

The Energy Information Administration released their weekly report yesterday.

Nationally, stocks continue to be above the mid point of 5 year range. However... once again the Pacific.

While the Pacific gained this past week, it only matched the curve for time of year.

Prices increased in most West Coast markets this week, except at SoCal Citygate in Southern California, where the price decreased 45 cents from $3.85/MMBtu last Wednesday to $3.40/MMBtu yesterday. Natural gas consumption in California declined 8% (0.4 Bcf/d) week over week, led by a 26% (0.5 Bcf/d) decrease in consumption in the electric power sector, according to data from S&P Global Commodity Insights. 

Select inventories of EU and UK... 

Total percent of capacity rose this past week to 80.76%.

The near term Natural Gas Prices for the EU and UK fell this past week. (Note: figures are in dollar terms and Mmbtu.)

Not surprisingly, the high 12 month also slipped. Currently that 12 month high is January, 2024.

Just for comparison, the UK current pricing would suggest £1,484.27 per annum, while the 12 month high (Jan-24) would suggest £2,235.81. OFGEM has a cap around £2,047, which is line with the October/November futures. (Note: The OFGEM cap reduction is more of a reduced consumption number, not so much as lower price per unit. Make of that, as you wish.)

While it could be said that EU and UK natural gas prices are skirting with levels not seen in 2 years, there is still angst in their markets. 

 

 

Producer Price Index July 2023 release for June Data.

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

The Producer Price Index for final demand increased 0.1 percent in June, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices declined 0.4 percent in May and edged up 0.1 percent in April. (See table A.) On an unadjusted basis, the index for final demand advanced 0.1 percent for the 12 months ended in June. 

In June, the increase in final demand prices can be traced to a 0.2-percent rise in the index for final demand services. Prices for final demand goods were unchanged.

The index for final demand less foods, energy, and trade services moved up 0.1 percent in June after no change in May. For the 12 months ended in June, prices for final demand less foods, energy, and trade services advanced 2.6 percent.

The rate of increases has slowed and selected areas are now trending downward. The PPI since start of Covid has risen 17.8%, compared to the CPI rise of 18.3%. (That is just two data points and should not be construed as any indication of some guaranteed future changes.)

The downward trend continues...

Except...

The attention is now shifting to "services"..

Even this will likely resume falling by next month, as it is an annual rate. The montly stood flat, after two months of gains.

Still, a good report... IF the trend continues.

Gasoline consumption per latest EIA data, July 12, 2023

Gasoline prices (per AAA) rose from last report to $3.541, as anticipated. One year ago the price had fallen to $4.665, and was on its downward trajectory... into the mid September lull, around  $3.67.

Consumption slipped week over week, but stands 6.3% above year ago numbers. (This is a four week moving average).

The import/export surplus of gasoline since last March 1st 2022, jumped to +101.1M barrels. It had basically remained flat for the past 3 months, until this past week's 2.3M barrel jump.

Rinse and repeat. There remains a slight upward bias, mostly due to a jump in WTI price, due to mostly dollar fall, mostly due to anticipation of FED pausing rate hikes, due to today's CPI report. 

All of which will likely come due... when next month's CPI tracks higher. 

Crude and Petroleum Product Inventories - July 12 2023

Data per the EIA weekly report. 

Crude stocks Increased by +5.9M barrels, from last week, yet remains down -0.9% from the 5 year seasonal average. It should be noted the 5 year average includes the abnormal 2020 and 2021 number. Otherwise, the current inventory is nearly +2.5% above normal.

Distillates inventory jumped +4.8M barrels; and Gasoline inventories stayed flat. Distillates (-14%,-3.7%) and Gasoline (-5.6%, -2.8%) are both below 5 year and 3 year adjusted average inventories.

The SPR fell another -401K barrels.

WTI is $75.87, compared to $72.09, one week ago, and $90.15, one year ago.

Refinery output imporved on a weekly basis, yet remains below year ago levels

For anyone interested, the U.S. has exported 745M barrels of crude and petroleum products, more than imported, since March 1, 2022. It jumped nearly 10M barrels this past week.

Overall, crude stocks remain quite healthy, compared to this time last year, with days supply at 28, compared to last year's 25.9 days.

So how could inventories increase and yet the price of WTI go up? It is petro dollars and the dollar slipped due to the anticipated great news on the CPI, which would mean the FED might pause rate hikes. 

As the old saying goes...

You can fool all of the people some of the time,

And fool some of the people all of the time.

But you can't fool all the people, all of the time.

The question becomes... who is fooling whom? 

BLS releases latest Real Earnings... July 12, 2023

The BLS has released the latest Real Earnings Report. 

Real average hourly earnings for all employees increased 0.2 percent from May to June, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from an increase of 0.4 percent in average hourly earnings combined with an increase of 0.2 percent in the Consumer Price Index for All Urban Consumers (CPI-U).

Real average weekly earnings increased 0.5 percent over the month due to the change in real average hourly earnings combined with a 0.3-percent increase in the average workweek.  

Real average hourly earnings increased 1.2 percent, seasonally adjusted, from June 2022 to June 2023. The change in real average hourly earnings combined with a decrease of 0.6 percent in the average workweek resulted in a 0.6-percent increase in real average weekly earnings over this period.

Generally speaking, real income growth has about matched pre-Covid, per the graphs below.

But first, as usual, a few notes about the graphs and underlying data, especially #2 and #3, which seem to fall into the political rhetoric arena....

1. These hourly and weekly figures are in 1982~1984 dollars, so that inflationary impact can be easily seen. The $11.03 per hour in the first graph would be $33.34 per hour in today's dollars. 
2. Much is made about the decrease in hourly wages, but some easy explanation... We can all remember when covid shut everything down, and people were sent home. Some kept working at their jobsite or from home. 
3. Many others went home without a job. A lot of those were lower wage employees, which skewed the hourly and weekly rates upward, until those employees slowly returned to work.
4. I have January, 2020 (pre-covid) on each graph, so that comparisons can be made to current. Also, the unemployment rate then and now are very similar. 

A 3¢ an hour gain since pre-covid. Considering "real" earnings is adjusted for inflation, this can be considered a positive.

Real weekly earnings finally pulled ahead of pre-covid levels. This is good news and hopefully continues.

Then there is what I refer to as the average person categories...

The hourly rate is 2% above pre-covid.

This category is 2.2% above pre-covid. This is the best news of the day and doesn't seem to get any attention. 

Oh well... on to today's energy reports. 

CPI Latest DATA results, July 12, 2023

The BLS report was released this morning and it was a shade below consensus estimates. (historical releases)

The consensus: 0.2% increase in CPI (monthly); 0.3% increase in core CPI (monthly); 3.0% Y-Y CPI; and core 5.0% Y-Y. The result: 0.2% CPI (monthly); 0.2% core (monthly); Y-Y CPI at 3.0%; and core at 4.8% Y-Y. The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.2 percent in June on a seasonally adjusted basis, after increasing 0.1 percent in May, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.0 percent before seasonal adjustment.

The index for shelter was the largest contributor to the monthly all items increase, accounting for over 70 percent of the increase, with the index for motor vehicle insurance also contributing. The food index increased 0.1 percent in June after increasing 0.2 percent the previous month. The index for food at home was unchanged over the month while the index for food away from home rose 0.4 percent in June. The energy index rose 0.6 percent in June as the major energy component indexes were mixed.

A lot was made about the year over year dropping for 12 consecutive months. It has, but that party is coming to an end, as July is set to pop up by +0.34% to +3.4% annual, and core up +0.4%, to +4.8% annual.

For some reason, the idea that 3.0% annual is normal!

Since January 1948~ January 2021, the average has been 3.5%, so it could be said 3.0% is normal. However, the 21st century up to January 2021... saw an average of 2.1%. So which "normal" is it?

While the report seems to be "good', let's not forget the index has risen 16.6% in 27 months and the cost of food at home has risen 19.9% during the same period.

The notion that consumers are under less stress due to this report is baffling. It is still an increase in most everything... except gasoline and energy et al. 

In the absolutely to early to project something category... the current outlook for C.O.L.A.

So far this month...

Time for more graphs... past 12 month CPI readings.

June, 2022 was the peak of annual inflation at 9.1%. Inflation for the following 6 months was 0.2% or 0.4% annualized. The major driver in those numbers were the dropff in energy prices. The following 6 months saw prices increase 2.8% or 5.6% annualized, as energy prices stabilized.  

To repeat the 2.97% annual inflation for next month would require a flat month to month CPI. That would require an extraordinary drop off from current expectations. Energy looks to be stable, so where would such a dropoff take place?

And finally... My CPI over the past 12 months.

Next up is the "Real Earnings Report".

Natural Gas Inventory Report, July 07, 2023

The Energy Information Administration released their weekly report yesterday.

And as customary... the Pacific Region.

In California, prices declined week over week but remained elevated compared with other U.S. pricing hubs. The price at SoCal Citygate in Southern California decreased 98 cents from $4.83/MMBtu last Wednesday to $3.85/MMBtu yesterday. Consumption of natural gas in the electric power sector in California increased by 92% (1.0 Bcf/d) week over week, as temperatures increased. 

Select inventories of EU and UK... 

Yes, I am aware the capacity numbers change from time to time. Why... I don't know. If it troubles you... then you can figure it out.

While up in many area, the EU wide number slipped to 78.63%, from last week's 78.86%. Still remarkably high for the season. 

A brief look at the 12 month highs for futures... TTF (EU) and UKG (UK).

Showing an upward drift.

However, current week ending prices...

Snapshot of the past, the current and the future outlook for prices.

Just for comparison, the UK current pricing would suggest £1,578.22 per annum, while the 12 month high (Jan-24) would suggest £2,318.11. OFGEM has a cap around £2,047, which is line with the October futures.

It should be noted the OFGEM cap reduction was more of a reduced consumption number, not so much as lower price per unit. Make of that, as you wish.