WTI Crude Oil

US Stock Market Overview – Stocks Trade Mixed, Energy Shares Rally

US stocks were mixed on Wednesday, as both the Dow and the S&P 500 closed in the red while the Nasdaq bucked the trend. Strong earnings from Micron boosted the semi-conductor space which helped buoy the tech heavy Nasdaq. Sectors were also mixed. Energy shares led the way higher rising 2.25%, fueled by a surge in crude oil prices following a larger than expected draw in crude oil inventories. Utilities were the worst performing sector.

Energy Shares Surge

Energy shares were buoyed by a larger than expected draw in crude oil stockpiles. The Energy Information Administration reported that crude oil inventories decreased by 12.8 million barrels from the previous week. Expectations were for a 2-million barrel draw. At 469.6 million barrels, crude oil inventories are about 5% above the five year average for this time of year. Gasoline inventories decreased by 1.0 million barrels last week and are at the five year average for this time of year. Distillate fuel inventories decreased by 2.4 million barrels last week and are about 7% below the five year average for this time of year. Total commercial petroleum inventories decreased last week by 11.9 million barrels last week.

Demand remains solid. According to the EIA total demand over the last four-week period averaged 20.6 million barrels per day, up by 1.8% from the same period last year. Over the past four weeks, gasoline demand averaged 9.7 million barrels per day, up by 2.1% from the same period last year. Distillate fuel demand averaged 3.9 million barrels per day over the past four weeks, up by 2.9% from the same period last year.

The drop in inventories came from lower imports. The EIA reported that crude oil imports averaged 6.7 million barrels per day last week, down by 812,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 7.4 million barrels per day, 10.2% less than the same four-week period last year.

The G20 is This Weekend

President Trump will meet with President Xi Jinping at the G-20 summit of world leaders. The two world leaders are scheduled to meet Saturday, the second day of the two-day summit in Osaka, Japan. Officials from both countries have been careful to manage expectations ahead of the summit, playing down the possibility of completing a trade deal.

US Business Investment Rose

US made capital goods rose more than expected in May. The Commerce Department said on Wednesday orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, increased 0.4% last month amid increases in demand for machinery, and computers. Expectations were for core capital goods orders edging up 0.1% in May. Core capital goods orders rose 2.3% on a year-on-year basis. Shipments of core capital goods increased 0.7% last month after an upwardly revised 0.4% gain in the prior month. Core capital goods shipments are used to calculate equipment spending in the government’s gross domestic product measurement.