Review of PCE, GDP, etc., for end of June, 2023

Another month to review (with some comments at the end)...

The following looks good, except....

The outlook for core is actually higher than the total inflation. Which means food and energy are the main drivers of overall lower inflation. Sounds good, except it really isn't food as much as energy. Energy crested in June of last year and then quickly slid... going into September. 

Just saying, the falling overall inflation numbers may come to an abrupt halt in the fall.

Now for the adjustments...

Personal Income and Outlays...

Now for the GDP...

The updated estimates primarily reflected upward revisions to exports and consumer spending that were partly offset by downward revisions to nonresidential fixed investment and federal government spending. 

I highlighted my area of concern. Note the statement of upward revision in consumer spending, then review the PCE expenditures directly above. January was good and presumably the revision upward in February would match up with the quoted statement.

However, April was revised up a mere +0.2 from original flat and May is also flat. 

So where is the growth coming from in the 2nd quarter?

Natural Gas Inventory Report, June 30, 2023

The Energy Information Administration released their weekly report yesterday.

As always... the Pacific Region...

Prices increased in all West Coast markets this report week. At PG&E Citygate in Northern California, the price rose 96 cents from $3.02/MMBtu last Wednesday to $3.98/MMBtu yesterday. The price at SoCal Citygate in Southern California increased 3 cents from $4.80/MMBtu last Wednesday to $4.83/MMBtu yesterday. The price at Sumas on the Canada-Washington border rose 59 cents from $2.02/MMBtu last Wednesday to $2.61/MMBtu yesterday.

Select inventories of EU and UK... 

Overall, very good, with EU wide numbers at 78.86% full.

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

A slight uptick for the 12 month, but still below the 5-5 picture. 

Current week ending prices...

Current futures (August v 12 month high)

Basically, the current futures are about where they were 2 years ago, when the EU was worried about Russia messing with natural gas deliveries and woefully inadequate natural gas stocks. 

Has the storm been weathered? 

Gasoline consumption per latest EIA data, June 28, 2023

Gasoline prices (per AAA) eased down  from last report to $3.556, or -2.5¢. One year ago the price had ballooned to $4.881, and was on its downward trajectory... into the mid September lull, around  $3.67.

Consumption increase week over week, and stands 4.5% above year ago numbers. (This is a four week moving average).

The import/export surplus of gasoline since last March 1st 2022, stands at +98.7M barrels. It has basically remained flat for the past 3 months.

Where will pump prices be next week? My estimate last week was ±7¢, with a downward bias. Result was down -2.5¢. Sooo... ±5¢, with an ever so slight upward bias.  

Crude and Petroleum Product Inventories - June 28 2023

Data per the EIA weekly report. 

Crude stocks fell by -9.6M barrels, from last week, and remains down -2.4% 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 +1.7% above normal.

Distillates inventory edged up 123K barrels; and Gasoline inventories increased +603K barrels. Distillates and Gasoline are both below 5 year and 3 year adjusted average inventories.

The SPR fell another -1.351M barrels.

WTI is $69.45, compared to $69.34, one week ago, and $107.01, one year ago.

Refinery output eased back on a weekly basis, and compared to year ago levels.

For anyone interested, the U.S. has exported 730.9M barrels of crude and petroleum products, more than imported, since March 1, 2022. It jumped nearly 20M barrels this past week.

Overall, crude stocks remain quite healthy, compared to this time last year, with days supply at 27.5, compared to last year's 25.3 days.

Comparison of Inflation in selected countries

 

Stats Canada reported their y/y inflation numbers this morning, so here goes with a graph... since January, 2020.

Some folks might prefer a chart, so here it is... as well.

Included in both is the United States inflation by way of using the EU methodology. The overall picture indicates much improvement in y/y figures, although the United Kingdom seems to be stalled. 

As for the United States, the rate of y/y inflation appears set to fall further, but a considerable part of the drop is due to lower energy costs. With June, 2022 being the peak of gasoline costs, and a rapid fall back to near current levels in September, 2022... the benefit of y/y inflation reduction will quickly recede. 

The focus will become core + food, imho. 

Natural Gas Inventory Report, June 23, 2023

The Energy Information Administration released their weekly report yesterday.

As always... the focus is on the Pacific Region...

Along the West Coast, prices increased this week, in line with the Henry Hub, even as consumption in California declined slightly week over week. The price at PG&E Citygate in Northern California rose 16 cents, up from $2.86/MMBtu last Wednesday to $3.02/MMBtu yesterday, while in Southern California, the price at SoCal Citygate increased more than any other major hub this week, rising $1.67 from $3.13/MMBtu last Wednesday to $4.80/MMBtu yesterday.

Select inventories of EU and UK... 

Virtually all areas continue to increase NG in storage. Despite the hysteria, NG futures continue to ease, both nearby and 12 month... on the EU and UK market, with the Henry Hub, up slightly.

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

Recently, I have noticed some articles stating how the EU/UK natgas prices are surging and giving many reasons. Even one that was AI generated. 

Yet these hysterical articles don't seem to hold up for very long.

Surging... compared to what?

Gasoline consumption per latest EIA data, June 22, 2023

Gasoline prices (per AAA) eased down  from last report at $3.584, or -0.7¢. One year ago the price had ballooned to $4.955, and was on its downward trajectory... into the mid September lull, around  $3.67.

Consumption slipped -1.2% from last week, and stands 2.7% above year ago numbers. (This is a four week moving average).

The import/export surplus of gasoline since last March 1st 2022, stands at +98.7M barrels. The import/export numbers are starting to reflect pre Ukraine invasion pattern. Which was the U.S. importing in the spring- summer and exporting in the fall - winter. It generally was balanced through the year. 

Where will pump prices be next week? My estimate last week was ±5.0¢ and down -0.7¢.

Not sure that will happen this coming week, as several factors have me leaning to pump prices heading a bit lower. Again, the range may be in the ±7¢, with a downward bias. Okay, for a bold number... national average for AAA at $3.511, on next the 28th of June.