Wholesale Inventory-To-Sales Ratio Drops To Record Low As Sales Of Petroleum Products Surge In Advance Of Price Hike

Tyler Durden's picture

Another quite odd data point about the US Economy: while US wholesale inventories came at 1.1% on expectations of 0.9%, (a drop from the revised 1.3%), wholesale sales increased by 3.4% on expectations of 0.5%, (and the previous revised from 0.4% to 1.1%). A headline glance would indicate a trend of improvement, as the Inventory/Sales ratio dropped to an all time low 1.13. Yet digging into the wholesale data indicates that not is as it seems: "Compared to last month, sales of motor vehicle and motor vehicle parts and supplies were up 7.8 percent and sales of electrical and electronic goods were up 3.4 percent. Sales of non durable goods were up 4.4 percent (+/-0.9%) from last month and were up 16.2 percent (+/-2.1%) from last year. Sales of petroleum and petroleum products were up 10.6 percent from last month and sales of farm product raw materials were up 5.7 percent." It appears that the bounce in wholesale sales was attributed primarily to stockpiling of oil products in advance of what many anticipated (correctly) would be an oil price shock. Look for this metric to plummet in February and March as prices have no caught up with reality.

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Long-John-Silver's picture


On another note: Silver and to a lesser extent Gold is being hammered down (as usual). BTFD!

Azannoth's picture

I hope they hammer it some more I took profits too early ;( and silver bullion is unacceptably high

Long-John-Silver's picture

Looks like you just missed the dip. It's headed back up faster than it was manipulated down. Someone has a BTFD auto-script file running.

IQ 145's picture

 Oh, you betcha. Many, many someones. One definition of a bull market; the dips are bought.

cowdiddly's picture

Nah, the economy is just recovering from all the snowstorms.

Long-John-Silver's picture

It takes a while to use up the Bread and Milk purchased for a snow storm weather report.

IQ 145's picture

 thirty years ago, I used to trade a commodity account actively, and my broker, who was a friend, used to call me Long John Silver. (first name john).

Just Observing's picture

I know I stocked up.  Filled the 300 gallon tanks on stands with gas and farm diesel, and fill some more 55gal drums.

ageofreason's picture

Hmmm....a 2.4 million barrel uptick in crude supplies......


OH how CNBS can't connect the dots with that sack of manure Steve Leismen!

Flakmeister's picture

  Did you see the drawdown in refined products? Or total petroleum inventories?

From: http://ir.eia.gov/wpsr/wpsrsummary.pdf


Total motor gasoline inventories decreased by 5.5 million barrels last week and are above the upper limit of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories decreased by 4.0 million barrels and are above the upper limit of the average range for this time of year. Propane/propylene inventories decreased by 1.4 million barrels last week and are below the lower limit of the average range. Total commercial petroleum inventories decreased by 6.3 million barrels last week.


takinthehighway's picture

How much of that drawdown could be attributed to using up winter blends in preparation for the release of the summer formulations?

IQ 145's picture

 I think you're right. The fundamentals aren't there for the prices; it's mostly speculation and the pro's. makes just as much on the downside as they do on the upside.

gwar5's picture

I bought 55 gal drums for $5 each 2 months ago.

I'm filling some of 'em up this week.

Miss Expectations's picture

I was in Raleigh last Saturday.  We stopped in to the Crabtree Valley Mall.  We couldn't find a place to park, it took 20 minutes.  The mall was PACKED...PACKED I say!  You would have thought they were having 75% off sales the day before Christmas.  I can't understand it.  It felt surreal.  (Malls are surreal to me anyway, but this was very, very wierd.)

Clockwork Orange's picture

Bingo - couldn't believe how large the lines were at Best Buy last weekend.

If you're playing long retail, Best Buy is as good a bet as any ... until 'kaboom' that is.

sabra1's picture

where do you think people who live in their cars park?

takinthehighway's picture

Truck stops - I saw five people living out of their vehicles at a Flying J outside of Tampa recently. Open 24/7. nobody messes with you, and clean showers are $10 (you can earn free ones with reward cards)...

ivars's picture

Next oil peak approaching:

Brent oil futures, the benchmark contract for European oil, rose $2.25, or 2%, to $115.31 a barrel on ICE Futures in London.

Flakmeister's picture

Approaching???  It's entering the rear view mirror...

Here is a toy model of oil pricing:

Oil price inelasticity = -0.06 to 0.07  i.e. 1% cut -> 14-16% price increase

Brent Price Jan 2005  ~$40

World Net Exports since Jan 2005 = ~ -9%

Dollar index  factor for time period: DXY  90/76

Predicted value of brent today:  $108 - $118

Absolutly fucking remarkable, eh?

IQ 145's picture

 He's easily distracted by techno-babble; there is no "predicted value" of anything. Next significant move in crude price is down; say at 65% probability. Good enough to trade on; but I'm not. The guaranteed pay-out is short the Long Bond on the CME; you can hold this position for a year or more.

Flakmeister's picture

The real money is made on the trend...not the noise. Start fading oil assets at 125, if you insist.