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Sunday, November 30, 2014

Monday: ISM Manufacturing

by Calculated Risk on 11/30/2014 08:27:00 PM

From Professor Hamilton at Econbrowser: A glut of oil?

The world is awash in oil, I’m hearing. The problem is, it’s fairly expensive oil.
[C]onsider the United States, where production has grown 2 mb/d since 2004. More than 3 mb/d of that growth has come from fracking of oil trapped in tight geologic formations. Without tight oil, U.S. production would be down more than a million barrels a day over the last ten years and down 5-1/2 mb/d from its peak in 1970.
So here’s the basic picture. The current surplus of oil was brought about primarily by the success of unconventional oil production in North America, most new investments in which are not sustainable at current prices. Without that production, the price of oil could not remain at current levels. It’s just a matter of how long it takes for the high-cost North American producers to cut back in response to current incentives. And when they do, the price has to go back up.
• At 10:00 AM ET, the ISM Manufacturing Index for November. The consensus is for a decrease to 58.2 from 59.0 in October. The ISM manufacturing index indicated solid expansion in October at 59.0%. The employment index was at 55.5%, and the new orders index was at 65.8%.

Schedule for Week of November 30th

From CNBC: Pre-Market Data and Bloomberg futures: currently the S&P futures are down 4 and DOW futures are down 25 (fair value).

Oil prices were down sharply over the last week with WTI futures at $64.37 per barrel and Brent at $68.50 per barrel.  A year ago, WTI was at $93 and Brent was at $111 per barrel - so prices are down more 30% to 40% year-over-year.

Below is a graph from for nationwide gasoline prices. Nationally prices are around $2.77 per gallon (down about 50 cents from a year ago).  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