U.S. Energy Product Costs Plumb New Lows

The per barrel price of West Texas Intermediate crude oil has weakened due to reduced demand from around the globe and increases in supply. It declined to $23.36 yesterday from an average $24.79 last week after averaging $32.34 in the prior week. It was the lowest price since March 2002. Prices have fallen from $61.75 averaged in the first week of January. The price of Brent crude oil weakened to $27.07 per barrel yesterday from an average of $28.09 last week, down from $34.97 in the prior week. The price has fallen from a $67.38 high averaged in the last week of December.

Retail gasoline prices declined to $2.12 per gallon (-19.2% y/y) in the week ended March 23 from $2.25 per gallon in the previous week. Prices remained below an early-May peak of $2.90 per gallon. Haver Analytics adjusts prices for seasonal variation. The seasonally adjusted gasoline price fell to $2.14 per gallon.

The average price of natural gas fell to $1.79/mmbtu (-37.4% y/y) last week and reversed the prior week's increase to $1.87/mmbtu. The price weakened to $1.70/mmbtu yesterday and remained below the peak of $2.81/mmbtu early in November.

In the four weeks ending March 13, gasoline demand increased 2.1% y/y, while total petroleum product demand improved 0.3% y/y. Gasoline inventories eased 0.3% y/y and inventories of all petroleum products increased 1.5% y/y. Crude oil input to refineries declined 1.4% 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.

Federal Reserve issues FOMC statement: https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200323a1.pdf

Sales of new single-family homes declined 4.4% (+14.3% y/y) during February to 765,000 (AR) from 800,000 in January, revised from 764,000. The Action Economics survey expected sales of 754,000.

The median price of a new home rose 6.3% (7.8% y/y) last month to a record $345,900. The average price of a new home also increased to a record of $403,800 (5.3% y/y). The home price figures are not seasonally adjusted.

Sales activity was mixed across the country in February. Sales in the West declined 17.2% (+24.7% y/y) to 222,000 units. In the Midwest, sales fell 7.3% (+15.6% y/y) to 89,000. Working the other way, sales in the Northeast jumped 38.9% (47.1% y/y) to 50,000 while sales in the South edged 1.0% higher (6.3% y/y) to 404,000. 

The supply of homes on the market rose to 5.0 months in February, but the January figure was revised down to 4.8 months. These figures were below the high of 7.4 months at the end of 2018. The medium number of months that a new home was for sale held steady at 3.3, down from 14 months at the beginning of the economic expansion.

The data in this report are available in Haver's USECON database. The consensus expectation figure from Action Economics is available in the AS1REPNA database.

The Federal Reserve Bank of Philadelphia reported that its Nonmanufacturing Business Index of current general activity at the company level dropped to -12.8 during March after rising to 36.1 in February. The index of expected general activity similarly declined to -16.3 from 44.2.

Components of the company general activity index were uniformly weak this month. New orders figures collapsed to -16.4. A reduced 17% of firms reported improved new orders while a greatly increased 33% reported a decline. The sales or revenue series fell m/m to -4.9, the lowest level in over four years. The index of unfilled orders improved but the inventories measure cratered.

The labor market measures retreated in March. The full-time permanent employment measure fell to -1.7, indicating job cutbacks at the greatest rate since 2012. A greatly lessened 19% of firms reported increased hiring while a surging 20% reported a decline. Part-time/temporary employee hiring also weakened sharply to a roughly five-year low. The average workweek reading similarly collapsed as did the wages & benefits measure.

Pricing power was constrained. The index of prices paid fell sharply to 6.0, down from 34.7 just three months ago. A greatly lessened 15% of firms reported higher prices while an increased nine percent indicated a decline, the most in five years. Prices received also were significantly weakened.

The capital expenditure measures fell sharply. The physical plant measure declined to the lowest level since October. The equipment & software expenditure reading also weakened to a four-month low.

The Philadelphia Fed figures are diffusion indexes which are calculated by subtracting the percent of respondents reporting decreases in business activity from those reporting improvement. So, readings above zero indicate more positive than negative responses. These indexes have a good correlation with growth in the series covered. The data are available in Haver's SURVEYS database.