GLOBAL ECONOMICS AND POLITICS

Leo Haviland provides clients with original, provocative, cutting-edge fundamental supply/demand and technical research on major financial marketplaces and trends. He also offers independent consulting and risk management advice.

Haviland’s expertise is macro. He focuses on the intertwining of equity, debt, currency, and commodity arenas, including the political players, regulatory approaches, social factors, and rhetoric that affect them. In a changing and dynamic global economy, Haviland’s mission remains constant – to give timely, value-added marketplace insights and foresights.

Leo Haviland has three decades of experience in the Wall Street trading environment. He has worked for Goldman Sachs, Sempra Energy Trading, and other institutions. In his research and sales career in stock, interest rate, foreign exchange, and commodity battlefields, he has dealt with numerous and diverse financial institutions and individuals. Haviland is a graduate of the University of Chicago (Phi Beta Kappa) and the Cornell Law School.

 

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US OVERALL PETROLEUM INVENTORIES- ENOUGH IS ENOUGH © Leo Haviland April 5, 2013

What does a survey of total United States petroleum industry inventories (crude and products combined) relative to total products supplied indicate regarding current and near term US petroleum price trends? The very elevated days coverage (end month inventories versus average daily consumption for that calendar month) probably has significantly contributed to the renewed price weakness in the overall petroleum complex that emerged in February 2013.

The broad GSCI established a major high around 762 in spring 2011 (4/11 and 5/2/11 tops), with lower peaks at 717 on 3/1/12 and 699 on 9/14/12. NYMEX crude oil (nearest futures continuation) peaked 5/2/11 at 11483, with lower tops on 3/1/12 at 11055 and 9/14/12 at 10042.

As part of the major longer run downtrend that exists for commodities in general, note the assortment and timing of minor tops made in early 2013 (especially February) in several commodity indices and in numerous particular commodity marketplaces.

Many watch US equities alongside commodities in general and petroleum prices in particular. The S+P 500 in the past three years made springtime highs: 4/26/10 at 1220, 5/2/11 at 1371, and 4/2/12 at 1422. Compare the timing of the high in the S+P 500 during its recent rally, 4/2/13 at 1574. Compare also this 4/2/13 high in the S+P 500 with the timing of the fall off points in the petroleum complex just noted, as well as the renewed tumble in the broad GSCI from its 3/28/13 level around 659.

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US Overall Petroleum Inventories- Enough Is Enough (4-5-13)