Archive for January 27th, 2011

Daily Reading – January 27,2011

*** BoingBoing: Dubai’s artificial islands “sinking” ***
*** The Slope Of Hope: A Moment of Silence ***
*** The Big Picture: Has the Dow Entered a New Trading Range? ***
*** FT Alphaville: A record WTI-Brent spread, a new paradigm ***
*** FT Alphaville: The global inflation loop, a quick guide ***
*** FT Alphaville: Japan downgrade: The (umpteenth) denouement ***
*** FT BeyondBRICs: Egypt: bye-bye to the carry trade? ***
*** Macro Man: BDIY Underwater ***

Pending Home Sales Index Rose 2.0% In December

Pending home sales index rose 2.0% In December vs. revised (down from 3.5%) rise of 3.1% in November. On year level, the index is down 4.2%.

To repeat: Generally rising pending home sales are positive for the economy, but currently and until excess unsold housing inventory is cleared rising pending home sales index mean more foreclosed homes are being sold at depressed prices which is a sign of additional pressure on home prices.

Chicago Fed National Activity Index For December At 0.03

Chicago Fed National Activity Index for December was reported at 0.03 vs. revised November reading of -0.4. Chicago Fed National Activity Index 3-month moving average was at -0.22.

CFNAI is pointing to mild economic growth..

U.S. Durable Goods New Orders Fell 2.5% In December

Durable goods new orders fell 2.5% in December vs. 1.5% consensus and -0.1% revised increase in November (revised upwards from -1.3%)

U.S. Initial Jobless Claims At 454.000; Up 51.000

Initial jobless claims in the U.S. were reported at 454.000 vs. 405.000 consensus; last week revised (down 1.000) reading was at 403.000.

Again big spike upwards.

U.S. Petroleum Weekly – January 27, 2011

Crude oil stocks rose 4.8 million barrels; Gasoline stocks increased 2.4 million barrels; Distillate stocks fell 0.1 million barrels; Propane/propylene stocks were down 3.3 million barrels; Other oils stocks decreased 2.1 million barrels; Total crude oil and petroleum stocks were 2.4 million barrels higher for the week.

Refinery utilization fell 1.2% to 81.8%.

Implied crude oil demand rose 0.2 million barrels.

Crude oil and petroleum product net imports rose 0.2 million barrels to 9.7 million barrels.

Crude oil stocks rising, markets well supplied, demand weak.

Recent weeks are marked by record WTI vs. Brent crude price spread which is at record high of 11.2 USD per barrel. My best guess is that this is caused by three major factors: oversupplied U.S. market, smaller negative roll yield in Brent (or even positive roll on some contracts), coming CFTC futures position limits.

What this means for the crude oil price? I would say WTI is better proxy for oil price than Brent.


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