U.S. Energy Prices Are Mixed

• Crude oil prices improved last week, but a sideways trend persists.

• A supply/demand imbalance for petroleum intensifies.

The price of West Texas Intermediate crude oil increased to $24.40 per barrel last week from an average $21.72 one week earlier. Despite the improvement, the price remained roughly two-thirds lower y/y. Yesterday, the price was  $22.41. The price of Brent crude oil rose to an average of $32.25 last week. The price has fallen from a $67.38 high averaged in the last week of December. Yesterday, the price was $31.82.

Retail gasoline prices declined to $1.85 per gallon (-34.5% y/y) in the week ended April 13 from $1.92 per gallon in the previous week. Prices remained below their May 2019 peak of $2.90 per gallon. Haver Analytics adjusts the gasoline price series for regular seasonal variation. The seasonally adjusted price fell to $1.79 per gallon from $1.89.

The average price of natural gas rose to $1.77/mmbtu (-35.1% y/y) last week from $1.62, but remained below the peak of $2.81/mmbtu early in November. Yesterday, the price was $1.86/mmbtu.

Reduced prices reflect supply outpacing demand. In the four weeks ending April 3, gasoline inventories rose 12.3% y/y and inventories of all petroleum products increased 3.8% y/y. Gasoline demand declined 19.3% y/y, while total petroleum product demand fell 10.7% y/y. Crude oil input to refineries declined 5.9% y/y in the past four weeks.

These data are reported by the U.S. Department of Energy. The price data can be found in Haver's WEEKLY and DAILY databases. Greater detail on prices, as well as the demand, production and inventory data, along with regional breakdowns, are in OILWKLY.

•

• .

The National Federation of Independent Business (NFIB) indicated that its Small Business Optimism Index improved 0.2% (2.8% y/y) to 104.5 during February and added to its 1.6% January rise. The reading remained 4.0% below the high reached in August 2018.

The net percentage of firms expecting the economy to improve rose to 22% from 14%, but most other readings in the survey weakened. The net percentage of firms expecting higher real sales fell to 19% and reversed part of its January rise. The net percentage reporting that now was a good time to expand the business also declined modestly. 

On the labor front, there was improvement. The net percentage of firms planning to increase employment rose m/m to 21%, its highest level in three months. Nevertheless, it remained below the expansion high of 26% in August 2018. A higher 52% of businesses found few or no qualified candidates to fill job openings. It was the most in three months but still down from 57% in August of last year.

A steady net 36% of firms raised worker compensation, just below the expansion high of 37% reached in September 2018. Working the other way, a greatly reduced 19% of firms were planning to raise worker earnings last month, down from the 26% expansion high reached three months earlier.

Current pricing power deteriorated as a net 11% of firms reported raising prices and that mostly reversed three months of increase. A sharply lower net 20% of firms planned to raise average selling prices, increased from 15% in September.

Credit became easier to get. Only a net one percent of firms reported trouble obtaining financing. Sixteen percent of firms reported difficulty near the end of the recession in 2009. A lessened net two percent of firms were not satisfied that their borrowing needs were met in the last three months.

The small business survey inquires about additional issues facing small business. A lessened 25% reported a problem with the quality of labor and a greatly reduced 14% indicated that taxes were the largest problem. Government requirements were worrisome to a steady 13% of respondents. That remained below the September 2013 high of 24%. A steady eight percent of firms reported the cost of labor as the most significant problem, down from the record 11% in September of last year. Insurance cost/availability concerned a greatly increased 12% of respondents. Competition from large businesses was felt by a slightly higher 10% of businesses as the biggest problem. Poor sales were significant for just seven percent of businesses, down from 32% in 2009. Financial & interest rate problems worried just two percent of respondents. Inflation concerned a steady one percent of respondents as the biggest problem.

Roughly 24 million small businesses exist in the U.S. and they create 80% of all new jobs. The index is based 1986=100. The typical NFIB member employs 10 people and reports gross sales of about $500,000 a year.

The NFIB figures can be found in Haver's SURVEYS database.