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Supply
Oil prices fell over 2% Wednesday on demand worries caused by higher U.S. interest rates.
U.S. natural gas prices jumped over 4% Wednesday on forecasts of extremely high temperatures into next week.
In mid-morning trading today, WTI futures were up 0.2% at $115.50/bbl, Brent was down 0.4% at $118.00/bbl, and U.S. natural gas was up 3.2% at $7.66/MMBtu.
U.S. crude stocks rose unexpectedly last week, while production rose by 100,000 bpd to the highest level since April 2020. Gasoline inventories saw a smaller-than-expected drop on weakened demand.
The White House is raising pressure on oil companies to boost production, saying it may invoke emergency powers used for the baby-formula crisis to increase supplies of gasoline. Refiners, however, are already running well above historical averages.
A rapid rise in U.S. fuel exports is a major cause of high domestic prices, with seaborne shipments of gasoline, diesel and jet fuel departing the Gulf Coast about 32% higher the past three months than a year ago.
Chinese refinery production dropped 10.9% year over year in May, the steepest decline in a decade.
British gasoline and diesel prices jumped to a record high this week.
More oil news related to the war in Europe:
European gas prices spiked as much as 25% Wednesday on news that Gazprom is halting more shipments to Germany and Italy. Russia’s gas exports to key foreign clients are already down 29% this month to the lowest level in eight years, a move that German officials say is intentional.
Dangerous heat enveloped over 120 million people across the U.S. yesterday, with multiple cities, including St. Louis, Nashville and Charlotte, breaking temperature records.
Water deliveries from the Colorado River may have to be reduced up to 4 million acre-feet next year due to unrelenting drought. By comparison, California is entitled to 4.4 million acre-feet of the river’s water per year.
U.S. business inventories rose 1.2% in April as sales moderated. Inventory costs, meanwhile, were 33% higher in May than the same time in 2020, according to a survey of supply chain managers.
In the five years through 2021, Florida, Texas and Arizona increased their manufacturing employment the most, while New York, Washington and Illinois lost the most workers.
The White House’s seventh mission for “Operation Fly Formula” will bring over 44,000 pounds of baby formula into the U.S., although some shipments are being held up by delays at the FDA.
Domestic Markets
The U.S. reported 183,097 new COVID-19 infections and 682 virus fatalities Wednesday.
U.S. COVID-19 hospitalizations rose 2% last week for the seventh consecutive weekly rise.
About 86% of Floridians are living in high-risk COVID-19 counties compared to a national average of 22%.
The FDA recommended Moderna and Pfizer’s COVID-19 vaccine for children between six months and 5 years old, paving the way for full approval by the CDC. Every state but Florida has pre-ordered vaccines for the age group.
The Federal Reserve hiked its benchmark interest rate by 75 basis points Wednesday to a range between 1.5% and 1.75%, the largest increase since 1994. Officials signaled an identical rise could come next month, while investors bet rising borrowing costs will dampen consumer spending and raise business expenses.
Inflation has been running hotter than wage growth for 14 months straight, translating to smaller-than-expected gains in real wages:
The Atlanta Federal Reserve’s real-time GDP tracker estimates growth in the U.S. economy has slowed to zero this quarter.
Top executives of GM and Ford say U.S. consumer demand for cars and trucks remains strong, despite rising interest rates and record-high gas prices. In May, the average monthly car payment hit a record $712.
The auto industry’s top safety regulator reported nearly 400 recent crashes in which autonomous driving was involved. More than two-thirds of those crashes happened in a Tesla vehicle.
GM will invest $81 million to build its future Cadillac Celestiq electric flagship sedan at a plant near Detroit.
Boeing declined to offer a clear timeline on when it expects regulatory approval for its 737 MAX 10 aircraft as a December deadline for new cockpit requirements approaches.
The EU’s central bank promised fresh support and a new instrument Wednesday to temper a recent market rout that has officials fearing a debt crisis.
The Bank of England is expected to raise its main interest rate by 25 basis points to 1.25% this month, what would be the highest rate in 13 years.
Most Persian Gulf central banks followed the U.S. Federal Reserve Wednesday by lifting their key interest rates by 75 basis points, while Saudi Arabia made a smaller hike.
Brazil’s central bank raised its benchmark interest rate by 50 basis points to 13.25% Wednesday.
The majority of U.S. businesses in Shanghai have resumed operations following the city’s lockdown, although only 31% are back to full operations.
Chinese retail sales fell 6.7% in May from a year ago, the third straight month of declines.
Home sales in China rose 26% from April to May, the first month-over-month gain this year in a tentative sign of an improving property market.
Foreign investors cut their holdings of Chinese bonds by another $16 billion in May, as the yuan hit its lowest level in 20 months and institutions continued shifting money into better-performing assets.
China Southern Airlines began testing Boeing 737 MAX jets for the first time since March, signaling an impending return of the jet in China.