Chart of the Day
The weekly EIA report showed crude inventories fell by 6.4 mn barrels last week and are now 2.5% lower than their average at this time of year over 2017-19. To be clear, a fall in inventories was expected because of the damage caused by Hurricane Ida a couple of weeks ago, which has knocked off a lot of production. But the fall in inventories was still almost twice as large as analysts expected. If production doesn’t recover soon, we could be in for a stronger run for oil prices for the rest of the year.
Macro
US industrial production growth decreased to 5.9% YoY in August, due to a 0.4% MoM move. The ISM manufacturing index suggests growth will slow to close to 5% YoY.
That being said, the Empire State manufacturing survey rose to 34.3 in September, which could put upward pressure on the ISM manufacturing index this month.
Canada’s inflation surprised to the upside of forecasts in August – now 4.1%.
The same was true in the UK, where inflation is a lower 3.2%.
In the eurozone, industrial production rose by 1.5% MoM in July, much better than expected and maybe a sign supply issues there are being resolved.
Markets
The drop in oil inventories lifted prices.
It was a good day for commodities more generally – a sign of things to come?
Either way, the S&P 500 energy index rose strongly and out of its recent trading range.
Bond yields have been rising much more in Europe than the US or Asia in the past month.
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