Energy Brief Today: Tamer inflation, calmer oil prices

By Timothy S. Snyder, Matador Economics

This morning’s CPI report showed inflation improvement. The month-over-month number showed prices rose .2% on expectation of +.3%, and year over year showed +2.8% on expectations of +2.9%. Core CPI came in +.2% vs. economists expectation of +.3% on the month and +3.1% on expectations of +3.2% year over year. Top to bottom, these numbers show improvement in the inflation picture.

Oil prices are settling down a tad, as demand looks to remain sound. There is a story from Irina Slav in Oilprice.com titled, “Oil Prices Rebound on Resilient Demand Signals” that suggests “crude oil prices inched higher after starting the week with sharp losses, amid reports of rebounding Asian imports and a weaker dollar that should stimulate stronger demand.”

Even with a build in crude oil inventories, as posted from last night’s API report, gasoline posted a strong draw in inventories. Slav wrote that the head of the International Energy Agency has apparently had a serious 180 degree change of heart, as he is no longer lamenting the end of the oil boom, in terms of “peak oil demand,” and is now touting the expansion of demand in the U.S. and around the globe.

This counters the Oilprice.com headline story suggesting the U.S. may be losing ground pushing LNG, as there may be a negative impact on aggregate demand for fossil fuels because of geopolitics and more. This is a weak thesis, assuming the “kingship of China” in global energy trade. I say don’t bet against the U.S. E&Ps and U.S. Service companies!

Last night’s API report showed a build in crude oil inventories of 4.247 million barrels, but a draw of 4.560 million barrels in gasoline. The distillates posted a build of 421,000 barrels and Cushing, Oklahoma, saw a draw of 1.196 million barrels.

U.S. winter weather

Spring weather is known for transitions, and today’s spring-like weather will have snow in the Rockies, Red Flag warnings in West Texas and eastern New Mexico and the possibility of severe weather from east Texas and moving east, otherwise mostly calm from the Southeast to New England.