Crude and Petroleum Product Inventories - APR 19 2023

 Today's EIA.gov report. 

Crude stocks dropped a whopping -4.6M barrels, from last week, and pulled it 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 +4.3% above normal.

Distillates fell -355K Barrels; and Gasoline increased +1.3M barrels. The SPR fell another -1.6M barrels.

WTI has fallen to $79.31, compared to $83.21, one week ago, and $106.41, one year ago. OPEC + did announce substantial output cuts, but the when, where and who, remains to be seen. The price jump is basically an expectation of China's economy regaining footing. Although the drop in price from last week is suspicious. 

Definition of suspicious, is basically me not being able to make sense of the price drop. It's almost as if someone, somewhere is not actually cutting output, or at least not in the near term.

Refinery output edged up on a weekly basis, but still below one year ago levels. I would make an assumption that the lag is still due to refinery maintenance.

For anyone interested, the U.S. has exported 609.7M barrels of crude and petroleum products, more than imported, since March 1, 2022. 17.8M barrels this past week. It could be stated that this is a result of SPR releases. Since that date, the releases have been 212M barrels, so that is about 1/3 of the reason. 

Overall, crude stocks remain quite healthy, compared to this time last year, with days supply at 29.7, compared to last year's 26.2 days.

While crude inventories remain in decent shape, the refining part of the equation is still lagging, compared to one year ago. 

West Coast Natural Gas Inventories still way below normal

The Energy Information Administration released their weekly report yesterday.

The graph indicates at the upper end of the 5 year, a deeper dive results in something like this...

Mountain and especially the West Coast is way below normal, which is also reflected in the pricing of that region, compared to others.

Although falling week over week, prices in West Coast markets remain elevated and are currently the highest in the United States. The price at SoCal Citygate in Southern California decreased 66 cents from $8.65/MMBtu last Wednesday to $7.99/MMBtu yesterday, and the price at PG&E Citygate in Northern California fell $1.52, down from $7.31/MMBtu last Wednesday to $5.79/MMBtu yesterday.

Generally speaking, about triple the rest of the nation. Some specific issues were colder than normal weather, this past winter, as well as numerous pipeline problems. 

Elsewhere...

TTF and UKG prices continue to ease down across the board. Henry Hub is still drifting lower into prices not seen in over 30 months. As a consumer, I consider that a good thing... if it gets passed on.

Haven't checked UK storage, but Germany is holding steady at 64%, which is more than double this time last year and near 50% higher than the 2016~2020 average for same period. 

It is hard to imagine a repeat of last year's gyrations and LNG shipments don't seem to be affecting Henry Hub. That is not to infer European energy costs are substantially waning. The consumer will likely continue to feel the shock for quite some time. Sorry!

Germany at 64% storage has to recoup the cost of that storage, which was really quite high... and continues to be quite high. 

 

4-14-23, Advance Retail Sales Report for March

Advance Monthly Sales for Retail and Food Services, March 2023

Advance estimates of U.S. retail and food services sales for March 2023, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $691.7 billion, down 1.0 percent (±0.5 percent) from the previous month, but up 2.9 percent (±0.7 percent) above March 2022. Total sales for the January 2023 through March 2023 period were up 5.4 percent (±0.4 percent) from the same period a year ago. The January 2023 to February 2023 percent change was revised from down 0.4 percent (±0.5 percent)* to down 0.2 percent (±0.1 percent).

Retail trade sales were down 1.2 percent (±0.5 percent) from February 2023, but up 1.5 percent (±0.5 percent) above last year. Nonstore retailers were up 12.3 percent (±1.2 percent) from last year, while food services and drinking places were up 13.0 percent (±2.6 percent) from March 2022.

The data is not inflation adjusted. The data in this graph is...

Plain and simple... the quantity goods being bought, has remained rather flat for several months. Inflation has made for the increases.

but up 2.9 percent (±0.7 percent) above March 2022

Again, that is before inflation is taken in consideration. The CPI-U, was 5.0%. And the M/M CPI-U was +0.1% seasonally adjusted. 

For the month to month, with inflation adjustments... 

Its not really bad news, as nothing as fallen off a cliff. With this being tax refund season... it should remain stable for a while longer.

It does appear that home renovation, appliances, and electronic items have somewhat paused. Restaurant and bars, seemed to slip last month, with groceries edging up. On the year to year, groceries are still down and the restaurant and bar category is running ahead.

I was confused over the m/m drop in gasoline and service stations, but suspect that is more to do with "seasonal" adjustments, rather than reality. But it may be we are not going into the convenient store for a snack and rather stopping at a drive thru restaurant.

The whole point being... sales were up, but stuff bought actually slipped -1.3% on the month and -1.9% on the year. 

It is too early to predict the sky is falling. I suspect some turnaround with the aforementioned tax refund season upon us. 

The oddity to me, is the difference in nominal sales from February 2020, to current. Sales have increased a whopping +31.5% during an inflationary period of 17.7%. That leaves 13.8% coming from somewhere. 

I keep coming back to the various simulus packages and the so called multipler effect. Which then leads me to wonder, when will it end. I suspect we are getting closer.

That is not to say, we are going to fall off a cliff, but rather some contraction in the economy, is likely.

Producer Price Index Apr 2023 release for March Data.

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

The Producer Price Index for final demand declined 0.5 percent in March, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices were unchanged in February and increased 0.4 percent in January. (See table A.) On an unadjusted basis, the index for final demand advanced 2.7 percent for the 12 months ended in March. 

In March, two-thirds of the decline in the index for final demand can be attributed to a 1.0-percent decrease in prices for final demand goods. The index for final demand services moved down 0.3 percent.

Prices for final demand less foods, energy, and trade services edged up 0.1 percent in March after rising 0.2 percent in February. For the 12 months ended in March, the index for final demand less foods, energy, and trade services increased 3.6 percent.

Last month's projection...

Still, I would anticipate March to be year over year of +3.0%, and month to month being flat. 

Not too bad for a complete idiot.

Now for my version of spin, or misdirection, or whatever. I tend to look for things that impact me, so my version... may not match your version.

Off the top, the energy index was almost 3/4 of that -0.5% m/m decline in final demand. While most everyone thinks of gasoline, it did rise in March and will continue to do so... maybe through May. It will not achieve last year's June highs, in my opinion. 

The story in energy is natural gas. This will show declines into the summer. I don't think it will achieve last summer's high, but it might come close. The upshot being a continuation of m/m declines and annual rates declining into that period.

Currently the PPI final demand number is sitting at 20.8% above the April, 2020 low. The CPI, for reference, is 17.7% above that same period. I would not project any significant correlation between those two figures.

March's number, per the PPIFIS, stands at 140.865, compared to last June's 140.156. It is still +0.5% from June. Clearly, the y/y will continue to decline, but how far will it decline?

Being someone that consumes food on a regular basis, I should point out the final demand on food was +0.6% m/m. That is stark contrast from yesterday's CPI "food at home", at -0.3%. That concerns me more than the rise in current pump prices. 

My review of the PPI data, leads me to believe the (core) sticky prices are stuck in the near term. The year over year, however, will continue to fall. At some part, core will also begin to slip.

Next month will likely show another -0.2% m/m, and a +2.0% y/y. No doubt the y/y will likely turn negative in the next few months, largely due to energy. At some point in the summer, the sticky core will have to pitch in, to keep the numbers in decline.

BUT, if that occurs, is it due to slowing demand?

Smarter minds will have to weigh in on that question.

Gasoline consumption through last Friday, APR-07-2023

Gasoline prices were (per AAA) were up 9.2¢ this week, to $3.621. A year ago, the price had ballooned to $4.098. I projected a 12.5¢ increase, and didn't get it. Hooray! Not a bad thing.

The  consumption edged up a healthy +3.1% from last week, and jumped 6.8% above year ago numbers. (This is a four week moving average).  

If you are really into this type of thing... the import/export surplus of gasoline since last March 1st 2022, stands at +99.3M barrels. This is a global market, so the global economy, as well as refinery output, is key to where pump prices will be.

Where will pump prices be next week? Last week, I forecast a +12.5¢ increase and got a +9.2¢ rise. I hope the reality is still less than my expectations.

So, it looks like a +12.4¢ increase at the pump. Here's hoping I am wrong.

As for the outlook of $4 per gallon at the pump nationally... 1st or 2nd week of May. 

Crude and Petroleum Product Inventories - APR 12 2023

Today's EIA.gov report. 

Crude stocks grew, +597K barrels, from last week, although still at +1.0% above 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 +6.0% above normal.

Distillates fell -606K Barrels; and Gasoline slid another -330K barrels. The SPR fell -1.6M barrels.

WTI has risen to $83.21, compared to $80.54, one week ago, and $99.40, one year ago. OPEC + did announce substantial output cuts, but the when, where and who, remains to be seen. The price jump is basically an expectation of China's economy regaining footing. 

Refinery output edged up on a weekly basis, but still below one year ago levels. I would make an assumption that the lag is due to refinery maintenance.

For anyone interested, the U.S. has exported 591.9M barrels of crude and petroleum products, more than imported, since March 1, 2022. 1.4M barrels this past week, which is well below previous weeks. It appears to be in crude exports being abnormally low. Maybe a tanker didn't sail on time?

Overall, crude stocks remain quite healthy, compared to this time last year, with days supply at 30.2, compared to last year's 26.7 days.

While crude inventories remain in decent shape, the refining part of the equation is still lagging, compared to one year ago. 

I am, also, puzzled by the gasoline side, as importing more than exporting... is somewhat of an anomaly.

Real Earnings: April Release of March 2023 Data

The BLS has released the latest Real Earnings Report. 

All employees

Real average hourly earnings for all employees increased 0.2 percent from February to March, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from an increase of 0.3 percent in average hourly earnings combined with an increase of 0.1 percent in the Consumer Price Index for All Urban Consumers (CPI-U).

Real average weekly earnings decreased 0.1 percent over the month due to the change in real average hourly earnings combined with a 0.3-percent decrease in the average workweek.  

Real average hourly earnings decreased 0.7 percent, seasonally adjusted, from March 2022 to March 2023. The change in real average hourly earnings combined with a decrease of 0.9 percent in the average workweek resulted in a 1.6-percent decrease in real average weekly earnings over this period.

Now for some comparison graphs, dating back to February 2020, or pre-covid. It is important to compare to that date, as the rates were distorted with all the layoffs early on. Remember... A lot of people were working from home, etc. A lot of people did not have that option.

The above rate is still a shade below February 2020.

The above rate is still a shade below February 2020.

The above rate is 14¢ higher than February 2020.

The above rate is $6.50 higher than February 2020.

It is better than losing ground, but not sure it is a sign of "real" progress.