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The US Energy Information Administration reported that US commercial crude oil inventories increased by 1.2M barrels to 421.9M barrels (5% below the five-year average) for the week ending January 26th, this follows a 9.2M barrels drop the previous week. An increase in inventories for gasoline was offset by a drop in distillate inventories, and a reduction in refinery capacity use. Gasoline inventories increased by 1.2M barrels (1% above the five-year average), as compared to a 4.9M barrels increase the previous week. Distillate inventories decreased by 2.5M barrels (5% below the five-year average), as compared to a 1.4M barrels decrease the previous week. Total commercial petroleum inventories dropped by 9.6M barrels. Crude oil refinery inputs averaged 14.8M bpd, a decrease of 428K bpd as compared to the previous week’s average. Refineries operated at 82.9% of their operable capacity down from 85.5%, the previous week, as gasoline production increased to an average of 9.3M bpd and distillate fuel production decreased to an average 4.4M bpd. Crude oil imports came in at 5.6M bpd, an increase of 25K bpd as compared to the previous week. Crude oil imports averaged about 6.2M bpd over the last four weeks, 5.9% less than the same period last year. Total motor gasoline imports averaged 400K bpd, and distillate fuel imports averaged 138K bpd.
The Federal Open Market Committee (FOMC) announced the it would keep its benchmark federal funds rate in the range of between 5.25% to 5.5%. This is the fourth consecutive meeting with no increase. Previously the central bank had raised its benchmark borrowing rate 11 times. The FOMC signaled that it isn’t ready to begin cutting rates in the near term. The FOMC statement stated that “The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent”. Fed Chair Powell in his press conference opened with, “Inflation has eased from its highs without a significant increase in unemployment… but inflation is still too high and ongoing progress in bringing it down is not assured and the path is uncertain”. Fed Chair Powell did indicate that if the economy continues on its current trajectory that there could be drop in the benchmark rate later this year stating that “We believe the policy rate is at its peak for this tightening cycle and that if the economy evolves broadly as expected it will likely be appropriate to begin dialing back policy restraint at some point this year”. When questioned on what the FOMC needs to see, Powell answered “We want to see more good data, it is not that we’re looking for better data we are looking for a continuation of the good data”.
The U.S. Bureau of Labor Statistics reported 353,000 jobs were added as the unemployment rate remained unchanged at 3.7% in January. December’s reading was revised up showing (+117,000) more jobs and November’s reading was revised up (+9,000). The number of unemployed workers was little changed in January at 6.1M. Job gains occurred in professional and business services (+74,000), health care (+70,000), retail trade (+45,000), government (+36,000), social assistance (+30,000), and manufacturing (+23,000). Employment was little changed in construction, wholesale trade, transportation and warehousing, financial activities, leisure and hospitality, and other services. Employment declined in the mining, quarrying, and oil and gas extraction industry (-5,000). Among the unemployed, the number of permanent job losers increased (+13,000) to a seasonally adjusted 1.556M, and the number of reentrants to the labor force increased (+93,000) to 1.834M. The labor force participation was unchanged at 62.5%, leaving it still below the pre-pandemic level of 63.4%. Average hourly earnings grew 0.6.%. At $34.55 average hourly earnings are up 4.5% from a year ago.
Monday February 5 – ISM Non-Manufacturing PMI (January)
Wednesday February 7 – Trade Balance (December)
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