Global| May 05 2020U.S. Petroleum Prices Improve
by:Tom Moeller
|in:Economy in Brief
Summary
• Crude oil prices rose last week following the prior week's collapse. • Gasoline prices increased two cents. • Natural gas prices weakened further. The spot price of West Texas Intermediate crude oil rebounded to $15.65 per barrel [...]
May 5, 2020
• Crude oil prices rose last week following the prior week's collapse.
• Gasoline prices increased two cents.
• Natural gas prices weakened further.
The spot price of West Texas Intermediate crude oil rebounded to $15.65 per barrel (-75.1% y/y) in the week ended May 1. The record low average of $3.64 set in the previous week was distorted by daily prices falling into negative territory (-$36.98 per barrel on April 20). Yesterday, the price was $20.39 per barrel. The price of Brent crude oil also recovered to $23.45 after falling sharply to $21.75 per barrel which was the lowest since March 2002. These prices were down from the weekly high of $84.96 early in October 2018.
Retail gasoline prices improved to $1.79 per gallon (-38.2% y/y) in the week ended May 4 from $1.77 per gallon in the previous week. Haver Analytics adjusts the gasoline price series for regular seasonal variation. The seasonally adjusted price held steady at $1.67 per gallon and remained at the lowest since January 2004.
The average price of natural gas slumped to $1.71/mmbtu (-34.3% y/y) in the week ended May 1 from $1.85/mmbtu the previous week. This was the lowest price since early last month. The price of natural gas is down from $4.67/mmbtu late in November 2018. Yesterday, the price rose to $1.78/mmbtu.
Reduced demand for oil and products is behind the collapse in prices. In the four weeks ending April 24, gasoline demand plummeted 43.7% y/y, while total petroleum product demand fell 28.0% y/y. Crude oil input to refineries declined 21.0% y/y in the past four weeks. At the same time, gasoline inventories rose 14.5% y/y and inventories of all petroleum products increased 6.0% y/y.
These data are reported by the U.S. Department of Energy. The price data can be found in Haver's WEEKLY and DAILY databases. Greater detail on prices, as well as the demand, production and inventory data, along with regional breakdowns, are in OILWKLY.
| Weekly Energy Prices | 05/04/20 | 04/27/20 | 04/20/20 | Y/Y % | 2019 | 2018 | 2017 |
|---|---|---|---|---|---|---|---|
| Retail Gasoline ($ per Gallon Regular, Monday Price, End of Period) | 1.79 | 1.77 | 1.81 | -38.2 | 2.57 | 2.27 | 2.47 |
| Light Sweet Crude Oil, WTI ($ per bbl, Previous Week's Average) | 15.65 | 3.64 | 20.11 | -75.1 | 56.91 | 64.95 | 50.87 |
| Natural Gas ($/mmbtu, LA, Previous Week's Average) | 1.71 | 1.85 | 1.72 | -34.3 | 2.57 | 3.18 | 2.99 |
U.S. Trade Deficit Deepens as Exports Fall in March • The foreign trade deficit in goods & services
reversed most of its earlier improvement. • Exports decline as growth abroad is weak. • Imports fell sharply with lower oil prices. The U.S. trade deficit in goods and services increased to
$44.42 billion during March from $39.81 billion in February, revised from $39.93
billion. A $44.1 billion deficit had been expected in the Action Economics
Forecast Survey. Exports declined 21.9% (-29.7% y/y after a 0.3% February
easing. Imports fell 6.2% (-11.9% y/y), down for the third straight month. The trade deficit in goods deepened to $65.6 billion last
month as goods exports fell 6.5% (-8.6% y/y). Auto exports declined 17.9% (-18.9%
y/y) as nonauto consumer goods exports fell 5.2% (-15.6% y/y). Imports of goods
fell 2.1% (-9.4% y/y). Petroleum imports fell 21.9% (-29.7% y/y) as the price of
crude oil fell to $34.94 per barrel. Nonpetroleum imports eased 0.5% (-7.6%
y/y). Capital goods imports rose 2.9% (-7.2% y/y) but nonauto consumer goods
imports weakened 7.7% (-14.4% y/y). The services trade surplus was little-changed at $21.18
billion and has been fairly stable for a year. A 15.3% decline (-14.8% y/y) in
exports reflected a 45.3% collapse (-50.1% y/y) in travel which was accompanied
by a 3.9% drop (-2.0% y/y) in charges for intellectual property. Imports of
services declined 21.8% (-22.2% y/y) reflecting a 63.8% weakening (-65.4% y/y)
in travel imports. The travel ban with China began on January 31, 2020.
Intellectual property imports rose 0.3% (2.8% y/y) in February. The goods trade deficit with China narrowed sharply to $19.7
billion (SA) in February. This compared to a record $43.1 billion deficit in
October 2018. U.S. exports to China fell 18.4% y/y while imports fell 30.8% y/y.
The trade deficit with the European Union narrowed to $12.6 billion (SA) in
February, the smallest deficit in 12 months. Exports to the EU were off 23.2%
y/y while imports weakened 15.8% y/y. The trade deficit with Japan narrowed to
$5.1 billion (SA) as exports to Japan rose 7.5% y/y while imports from Japan
fell 9.2% y/y. The international trade data can be found in Haver's USECON
database. Detailed figures on international trade are available in the USINT
database. The expectations figures are from the Action Economics Forecast
Survey, which is carried in AS1REPNA.
by Tom
Moeller May 5, 2020
Foreign Trade in Goods &
Services (Current $)
Mar
Feb
Jan
Mar Y/Y
2019
2018
2017
U.S. Trade Deficit ($ bil.)
44.42
39.81
45.48
52.7
(3/19)616.43
627.68
550.12
Exports of Goods & Services (% Chg)
-9.6
-0.3
-0.6
-10.9
-0.1
6.3
6.2
Imports of Goods & Services (% Chg)
-6.2
-2.5
-1.7
-11.9
-0.5
7.8
6.8
Petroleum (% Chg)
-21.9
-1.3
-7.8
-29.7
-14.0
20.8
27.2
Nonpetroleum Goods (% Chg)
-0.5
-2.7
-1.4
-7.6
-0.5
7.5
5.5
U.S. ISM Nonmanufacturing Misleadingly Strong in March
by Tom Moeller May 5, 2020
• ISM Nonmanufacturing index declined substantially less than expected to 52.5.
• COVID-19 related slowdown in supplier deliveries drove this reading.
• Slower supplier deliveries normally suggest economic strength, but in this case it is a sign of weakness.
The Composite Index of Nonmanufacturing Sector Activity from the Institute for Supply Management (ISM) decreased to 52.5 during March from 57.3 in February. The Action Economics Forecast Survey anticipated a drop to 46.0 in March.
Business activity, new orders and employment measures all declined, with business activity and employment dropping below the 50-growth mark to levels not seen since 2009/10. However, the supplier delivery index jumped to 62.1 from 52.4, indicating substantially slower supplier deliveries. This measure is inverted since slower supplier deliveries are normally a sign of strength. However, in this case it is a reflection of COVID-19 related supply problems. Supplier deliveries also slowed meaningfully in 2008, during the Great Recession as credit constraints hampered business activity.
Haver Analytics constructs a composite index combining the nonmanufacturing and the manufacturing ISM, which was released on Wednesday. While the manufacturing index declined below the 50-growth mark to 49.1, it would have been meaningfully weaker had it not been for a similar jump in supplier deliveries. The composite index is based on GDP shares. Since nonmanufacturing makes up almost 90% of GDP, the March reading of the composite remained above 50.
Both the export and import orders fell sharply, with the import measure dropping to levels not seen since early 2009, in the midst of the Great Recession. The prices index declined to 50.0 as the number of respondents indicating they were paying lower prices jumped to a four-year high 14.1%. These series are not included in the nonmanufacturing composite nor are they seasonally adjusted.
The ISM figures are available in Haver's USECON database, with additional detail in the SURVEYS database. The expectations figure from Action Economics is in the AS1REPNA database.
| ISM Nonmanufacturing Survey (SA) | Apr | Mar | Feb | Apr'19 | 2019 | 2018 | 2017 |
|---|---|---|---|---|---|---|---|
| Composite Diffusion Index | 52.5 | 57.3 | 56.3 | 55.5 | 59.0 | 56.9 | |
| Business Activity | 48.0 | 57.8 | 58.0 | 58.0 | 61.7 | 60.2 | |
| New Orders | 52.9 | 63.1 | 59.2 | 57.5 | 61.4 | 59.3 | |
| Employment | 47.0 | 55.6 | 55.9 | 55.0 | 56.9 | 55.1 | |
| Supplier Deliveries (NSA) | 62.1 | 52.4 | 52.0 | 51.5 | 55.8 | 53.2 | |
| Prices Index | 50.0 | 50.8 | 57.5 | 57.6 | 62.1 | 57.7 | |
| ISM Manufacturing and Nonmanufacturing Composite | 52.1 | 56.5 | 56.1 | 55.0 | 59.0 | 57. |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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