Wednesday, January 11, 2012
All The Chirpy EconoNews Doesn't Matter A Bit
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 5.0 million barrels from the previous week. At 334.6 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 3.6 million barrels last week and are above the upper limit of the average range. Both finished gasoline inventories and blending components inventories increased last week. Distillate fuel inventories increased by 4.0 million barrels last week and are in the middle of the average range for this time of year. Propane/propylene inventories decreased by 0.9 million barrels last week and are in the upper limit of the average range. Total commercial petroleum inventories increased by 9.4 million barrels last week.This should start to pick up a bit, because the unusual activity late last year seems somewhat linked to construction and an easier winter causing seasonally high construction activity. There is also more southern activity than in previous years relative to the whole, so winter means less. Anyway, they often knock off over the holidays, and it will pick back up now. Some of the build is due to milder weather, especially propane.
Total products supplied over the last four-week period have averaged 18.4 million barrels per day, down by 6.5 percent compared to the similar period last year. Over the last four weeks, motor gasoline product supplied has averaged 8.6 million barrels per day, down by 4.8 percent from the same period last year. Distillate fuel product supplied has averaged about 3.8 million barrels per day over the last four weeks, down by 2.2 percent from the same period last year. Jet fuel product supplied is 1.4 percent lower over the last four weeks compared to the same four-week period last year.
Nonetheless, this week net imports were 5.2% down compared to the first week in January last year, and they are more than 10% down YoY over the last four weeks. Domestic production is up 4.7%. US electricity production was weak in the second half, so I am not that optimistic. I remain convinced that the best-case outcome for the US economy in 2012 would be a skipping recession.
There is more trauma in Europe, mostly of the financial variety, but today the Germans claimed that their economy shrank in the fourth quarter of 2011, and absolutely no one expects Q1 to be much better. Trying to make the case that the European economy is not in recession just got hugely more difficult. It probably requires drugs to fuel the effort, or perhaps buckets of liquor combined with major caffeine.
The German statement, which is an estimate, does explain why we're seeing the PMI weaknesses in the Eastern bloc countries the last couple of months. Several of those economies are tightly linked to the German economy.
Hey! Have I mentioned lately that I remain pretty positive on US Treasuries this year? When the US economy is holding up the world economy, and the US economy is weak on electricity and fuel, ya gotta a whole lot of weakness going on.
I do not mean to be cruel, but when you are a manufacturing economy, and you decide to rework your whole energy supply, and you don't even bother to build the transmission lines to link up the windfarms, you have no one to blame for the result but your own delusional self. The Germans are suing themselves into recession.
PS: And Monti is revolting. The 3 year Treasury auction soared.
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