U.S. Gasoline Prices Down Last Week With Lessened Demand

Last week, the U.S. pump price for a gallon of regular gasoline reversed most of the prior period's strength. It fell twelve cents to an average of $3.72, according to the U.S. Department of Energy survey. The price still was elevated, however, by damage to refineries caused by Hurricane Ike. For all grades of gasoline the average price similarly fell last week by twelve cents to $3.77 per gallon.

Yesterday the spot market price for regular gasoline jumped by seven cents to $2.77 per gallon. That followed a twelve cent rise last Friday. Nevertheless, the latest rise left spot prices slightly below the level of last Wednesday. In futures trading the November contract was stronger and rose thirteen cents to $2.68 per gallon, the highest level since early-September.

Weekly gasoline prices can be found in Haver's WEEKLY database, daily prices are in the DAILY database.

According to the U.S. Department of Energy, the demand for gasoline fell 1.4% during the last four weeks. That was the largest weekly decline in a year and for the most part it reflected the seasonal decline in driving. Year-to-year, however, the drop still left gasoline demand off 2.67% year-to-year.

The DOE figures are available in Haver's OILWKLY database.

The price for a barrel of West Texas Intermediate crude oil fell last week to an average $97.29 per barrel. That's down from the high in July of $145.66.

Yesterday, the price for crude oil jumped to $16.40 per barrel from Friday to $120.92. That was the highest close since late-August. The two-month futures price, however, was less strong and rose $6.60 per barrel to $109.37.

Last week, prices for natural gas ticked up twenty cents w/w to an average $7.90 per mmbtu (+27.2% y/y). Prices reversed that strength yesterday and fell back to $7.67/mmbtu. The high for natural gas prices was in early-July at $13.19/mmbtu.

This morning's testimony by Fed Chairman Ben S. Bernanke on U.S. financial markets can be found here.

The International Council of Shopping Centers reported that chain store sales fell 1.0% last week after an even sharper 1.6% drop during the week prior. The weakness of sales for September so far is reflected in a decline which averaged 1.5% from the August average following that month's 0.2% uptick.

The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

August data on bank lending to individuals for mortgages and consumer credit were released today by the British Banking Association (BBA), a trade association which comprises Britain's biggest banks.

According to the BBA report, mortgage lending by banks declined by 8.6 billion pounds in August and was 12.7 billion below the level of August 2007. Bank lending on credit cards, however, rose 1.1 billion pounds in August and was 4.2 billion pounds higher than August 2007. Outstanding loans on mortgage and credit cards are shown in the first chart. Other consumer credit loans -- overdrafts and structured loans to individuals -- were both off slightly in August and from a year ago, as noted in the table below.

The decline in outstanding mortgage debt has been due to the decline in the number and value of mortgage approvals. Both have declined sharply since the end of 2006. The number of approvals fell another 5.2% in August and was 64.0% below August 2007. The value of mortgages approved fell 8.8% in August and was 69.1% below August, 2007. Both the number and the value of approvals are currently at the lowest points ever recorded since the series were first begun in September 1997.

Surveys show that both the MFG and services PMI’s slipped in September. But the MFG PMI fell harder. Still, over this relatively short horizon (since January 2006) this is the weakest reading on record for services. For MFG it is the weakest reading on this horizon as well.

Taking the MFG reading back to 1997 it stands in the bottom 13% of its range. That is a higher relative position to be sure but still quite weak and not much source of solace.

The PMIs confirm that economic activity in Europe continues to slip. The most recent month’s orders series for EMU (June) showed a rise, but that was from the volatile transportation sector. Excluding transportation, orders were still falling in June. The more topical PMI survey data give a peek into September and we can see that slippage has continued apace right up to date. It is for their relatively greater timeliness that these surveys on MFG and services are so prized.