Sunday, March 15, 2015

Monday: Industrial Production, Empire State Mfg, Homebuilder Confidence

by Bill McBride on 3/15/2015 09:08:00 PM

From Jim Hamilton: U.S. oil supply update (excerpt):

U.S. crude oil inventories continued to increase last week, signaling that so far supply continues to outstrip demand. And the Wall Street Journal reports a strategy followed by some companies that could enable them to bring production back up quickly if prices recover:
Now many are adopting a new strategy that will allow them to pump even more crude as soon as oil prices begin to rise. They are drilling wells but holding off on hydraulic fracturing, or forcing in water and chemicals to free oil from shale formations. The delay in the start of fracking lets companies store oil in the ground in a way that enables them to tap it unusually quickly if they wish– and flood the market again.
The backlog of wells waiting to be fracked– some are calling it fracklog– adds to the record above-ground inventories to restrain any significant price resurgence. Eventually, however, the economic fundamentals have to prevail, and we will settle down to a price around the true long-run marginal cost. The 2020 WTI futures contract closed at $67/barrel last week. But today North Dakota’s Williston Basin Sweet is fetching less than $29/barrel.
Monday:
• 8:30 AM ET, the NY Fed Empire State Manufacturing Survey for March. The consensus is for a reading of 7.0, down from 7.8 last month (above zero is expansion).

• At 9:15 AM, the Fed will release Industrial Production and Capacity Utilization for February. The consensus is for a 0.3% increase in Industrial Production, and for Capacity Utilization to increase to 79.5%.

• At 10:00 AM, the March NAHB homebuilder survey. The consensus is for a reading of 56, up from 55 last month. Any number above 50 indicates that more builders view sales conditions as good than poor.

Weekend:
Schedule for Week of March 15, 2015

FOMC Preview: Remove "Patient"

From CNBC: Pre-Market Data and Bloomberg futures: currently S&P futures are down 5 and DOW futures are down 30 (fair value).

Oil prices were down sharply over the last week with WTI futures at $44.11 per barrel and Brent at $53.56 per barrel.  A year ago, WTI was at $99, and Brent was at $107 - so prices are down 50%+ year-over-year.

Below is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are up to $2.43 per gallon (down about $1.00 per gallon from a year ago).   Prices in California are now declining following a refinery fire in February and a strike that is now over.

If you click on "show crude oil prices", the graph displays oil prices for WTI, not Brent; gasoline prices in most of the U.S. are impacted more by Brent prices.



Orange County Historical Gas Price Charts Provided by GasBuddy.com