U.S. Petroleum Prices Remain NearHigh But Spot Prices Fall

The trend has been upward for the cost of regular gasoline. Last week the price for a gallon remained at the prior week's high of $2.86 which was up by 78% since the December, 2008 low. At the margin, however, there's been some shakiness. Yesterday, the spot market price for a gallon of regular gasoline fell back by ten cents from the early-April high. The figures are reported by the U.S. Department of Energy and can be found in Haver's WEEKLY & DAILY databases.

Crude oil costs have been behind the gasoline price volatility. The price for a barrel of light sweet crude (WTI) fell a modest 1.6% last week to $84.60 from $85.97 but then fell twice that percent yesterday to $81.45. Regardless, prices remain up by two-and-one half times the 2008 low

The easing of gasoline prices has had nothing to due with the trend in demand. Weekly gasoline usage has been trending higher with more temperate weather and the improved economy. It was up 1.0% last week versus one year ago and that compares with a 3.0% decline in early-February. The demand for residual fuel oil fell 1.6% and distillate demand fell 4.8% y/y. Inventories of crude oil and petroleum products were stable through much of last month and were down slightly from one year ago.

U.S. natural gas prices were up slightly last week at $4.09 per mmbtu (+15.3% y/y). Prices reached a high of $6.50 early in January. Nevertheless, prices remained nearly double the September low.

The energy price data can be found in Haver's WEEKLY database while the daily figures are in DAILY. The gasoline demand figures are in OILWKLY.

Lessons from the failure of Lehman Brothers is this morning's House testimony by Fed Chairman Ben S. Bernanke and it can be found here.

Consumers still seem interested in spending money after being cooped up indoors this winter. As a result, chain store sales last week held onto the sharp gain early in the month and the y/y change remained at 4.6%, its strongest gain since early-2007.

During the last ten years there has been a 68% correlation between the y/y change in chain store sales and the change in retail sales at general merchandise stores.

The ICSC-Goldman Sachs 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.

The German financial community is upbeat on Germany's economic prospects over the next six months despite the disruptions caused by the eruption of the Icelandic volcano.  The ZEW Survey of institutional investors and analysts took place over the period, March 29 to April 19, that latter part of which was affected by the eruption of the volcano.  The survey revealed that those expecting macroeconomic conditions to improve over the next six months exceeded those expecting conditions to worsen by 53% up from 44.5% in March.  This was the first increase since September of last year and its magnitude exceeded consensus estimates of a rise.  

The change in the appraisal of current conditions was even greater.   The financial community has had a dim view of current conditions since August, 2008 when the pessimists regarding current conditions began to exceed the optimists.  By May 2009 the excess of pessimists reached 92.8%.   Since then, there has been a steady decline in the percentage of pessimists.  In April, the excess of pessimists was 39.2% an 11.7 point decline from the 51.9% of March. The percent balances between optimist and pessimists regarding current conditions and expectations for the next six months are shown in the first chart.

The improved appraisal of current conditions and expectations has led to some changes in profit expectations.  The second chart shows those industries where profit expectations have increased the most in the last month.  Although expectations for profits in the Vehicles/Automotive and Consumption/Trade are small and even negative in the case of the latter, expectations for profits in both these industries have increased the most in the last month.  Profit expectations for these industries and two other industries where profit expectations have had big increases--Machinery and Electronics--are shown in the second chart.  

Over the past few months the economic news in Germany had been encouraging.  The euro has declined almost 11% since early December.  Unemployment continues to fall and  new orders, particularly foreign, have been strong. may have contributed to the good feeling in the financial community