U.S. Petroleum Prices Plunge as Demand Dries Up

• Crude oil prices slid lower last week and dropped further yesterday.

• Gasoline prices fall as drivers stay off the road.

• Natural gas prices ease. 

The spot price of West Texas Intermediate crude oil weakened to $20.10 (-68.5% y/y) per barrel last week from an average $24.40 one week earlier. It was the lowest price since February 2002.  Yesterday, prices actually turned negative as oil producers paid buyers to take oil over fears of continued weak demand and a lack of storage. The price of Brent crude oil declined to an average of $29.18 last week. The price has fallen from a $67.38 high averaged in the last week of December. Yesterday, the price was $25.93.

Retail gasoline prices declined to $1.81 per gallon (-36.2% y/y) in the week ended April 20 from $1.85 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 $1.73 per gallon from $1.79.

The average price of natural gas edged lower to $1.72/mmbtu (-34.5% y/y) last week after rising to $1.77 in the prior week. They remained below the peak of $2.81/mmbtu early in November. Yesterday, the price was $1.86/mmbtu.

Reduced oil & product prices reflect a collapse in demand and a rise in supply. In the four weeks ending April 10, gasoline demand declined 31.6% y/y, while total petroleum product demand fell 18.5% y/y. Crude oil input to refineries declined 10.7% y/y in the past four weeks. At the same time,  gasoline inventories rose 15.0% y/y and inventories of all petroleum products increased 4.9% 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.

• New orders & shipments turn negative.

• Employment decline weakens wages.

• Prices paid fall sharply.

The Federal Reserve Bank of Philadelphia reported that its Nonmanufacturing Business Index of current activity at the company level dropped to -82.5 during April after weakening to -12.8 in March. The index of expected general activity similarly remained negative at -24.5.

Components of the company general activity index were all weak this month. New orders figures collapsed to -67.2 as only 0.3% of firms reported improved new orders while a greatly increased 68% reported a decline. The sales or revenue series fell m/m to -87.9. The index of unfilled orders also went negative but the inventories measure rose slightly.

The labor market measures unraveled in April. The full-time permanent employment measure fell to -47.5, indicating a record pace of job cutbacks. A greatly lessened 4% of firms reported increased hiring while a surging 52% reported a decline. Part-time/temporary employee hiring again was pulled back. The average workweek reading similarly dove. The wages & benefits measure turned negative.

Pricing power evaporated. The index of prices paid fell to -0.4, down from 34.7 late last year. A greatly lessened 13% of firms reported higher prices while a near-record 14% paid less. The prices received index fell well into negative territory.    

The capital expenditure measures collapsed. Both the physical plant and equipment & software expenditure readings turned negative. Seven percent of respondents raised outlays on equipment while 48% lowered them. 

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.    

• Existing home sales near 2019 low as coronavirus sets in.

• Sales decline around the country.

• Prices improved before quarantine.

The National Association of Realtors (NAR) reported that sales of existing homes during March declined 8.5% (+0.8% y/y) to 5.270 million (AR) from 5.760 million in February, revised from 5.770 million. It was the lowest level of sales since April of last year. The Action Economics Forecast Survey expected March sales of 5.30 million.

The median price of all existing homes sold increased 3.8% (NSA, 8.0% y/y) to $280,600 following a 1.6% February increase. The average sales price improved 3.3% last month (6.2% y/y) to $316,000. These price data are not seasonally adjusted.

Existing home sales weakened around the country in March. In the West, sales fell 13.6% (-0.9% y/y) to 1.080 million and reversed the increase in February. Sales in the South declined 9.1% (+0.9% y/y) to 2.290 million, the lowest level since November. In the Northeast, sales fell 7.1% (-3.0% y/y) to 650,000, roughly five-year low. Sales in the Midwest were off 3.1% (+4.2% y/y) to 1.250 million, the lowest level since May of last year.

Sales of existing single-family homes weakened 8.1% (+1.3% y/y) to 4.740 million units and reversed February's rise. Sales of condos and co-ops weakened plunged 11.7% (-3.6% y/y) to 530,000 units, the lowest level since July 2012.

The number of homes on the market decreased 10.2% y/y, but rose seasonally in recent months. The months' supply of homes on the market improved m/m to 3.4 but compared to 3.8 one year earlier. These inventory figures date back to 1999.

The data on existing home sales, prices and affordability are compiled by the National Association of Realtors and can be found in Haver's USECON database. The regional price, affordability and inventory data are available in the REALTOR database. The expectations figure is from the Action Economics Forecast Survey, reported in the AS1REPNA database.