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Factory Output in U.S. Declines More Than Forecast in August

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Output at American manufacturers fell more than economists forecast in August, a sign the industry is having trouble finding its footing.

The 0.4 percent decline at factories was the biggest drop since March and followed a 0.4 percent increase the prior month, a Federal Reserve report showed Thursday. Economists called for a 0.3 percent drop. Total industrial output, including mines and utilities, dropped 0.4 percent, also a steeper decline than anticipated.

The data add to concerns sparked last week by a private survey of purchasing managers that showed manufacturing contracted last month. Any slowdown in U.S. or global demand would further worsen the outlook for producers, who are trying to recover from the energy sector pullback, bulging inventories and lingering effects of the dollar’s surge.

“There’s not a lot of evidence that manufacturing is turning around quickly,” Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said before the report. “Manufacturing is going to continue to struggle through the rest of the year, though it’s not likely to contract.”

The latest results are consistent with the Institute for Supply Management’s factory survey for August, which signaled a contraction, albeit for the first time in six months. Orders plunged, production was cut by the most since 2012 and employment fell, that report showed.

Fed Meeting

Manufacturing, which makes up 75 percent of total industrial production, accounts for about 12 percent of the U.S. economy. Fed officials, meeting next week, are weighing economic data to determine when to raise interest rates.

Economists’ estimates for factory output in the Bloomberg survey ranged from a decline of 0.5 percent to an advance of 0.4 percent. The previous month’s reading was revised from a 0.5 percent gain.

For total industrial production, the Bloomberg survey median called for a 0.2 percent decrease. The prior month was revised to a 0.6 percent increase after a previously reported 0.7 percent advance.

Utility output fell 1.4 percent in August, the biggest decrease since March, after rising 2.1 percent the previous month, the Fed report showed.

Mining production, which includes oil drilling, increased 1 percent, the fourth straight monthly gain that reflects stabilization in the price of oil and other commodities.

Capacity utilization, which measures the amount of a plant that is in use, dropped to 75.5 percent from 75.9 percent in the prior month.

The output of motor vehicles and parts increased 0.5 percent after a 1 percent gain a month earlier. Excluding autos and parts, manufacturing output declined 0.5 percent after increasing 0.3 percent the prior month.

Machinery production dropped 1.9 percent, and output of computers and electronics gained 1 percent. Construction materials fell 0.6 percent. Consumer goods production declined 0.2 percent, while output of business equipment decreased 0.4 percent.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Markets

Oil Prices News: Oil Gains Following Drops in US Crude Inventories

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Oil Prices Gain Following Drops in US Crude Inventories and OPEC High Compliance Level

Global oil prices extended their 2 percent gains on Thursday after data showed U.S crude oil inventories declined last week.

The price of Brent crude oil, against which Nigerian oil is measured, gained 0.2 percent or 7 cents to $43.39 a barrel as at 12:10 pm Nigerian time. While the U.S. West Texas Intermediate (WTI) crude appreciated by 8 cent or 0.2 percent to $41.12 barrels.

Oil prices extended their three days gain after the American Petroleum Institute said the U.S crude inventories declined by 5.4 million barrels in the week ended October 9.

The report released after the market closed on Wednesday revealed that distillate stockpiles, which include diesel and heating oil, declined by 3.9 million barrels. Those stated drawdowns almost double analysts’ projections for the week.

Much of the fall is due to the effects of Hurricane Delta shuttering U.S. production in the Gulf of Mexico, and as such, will be a transitory effect,” said Jeffrey Halley, senior market analyst, Asia Pacific at OANDA.

“Therefore, I am not getting too excited that a turn of direction is upon markets, although both contracts are approaching important technical resistance regions.”

Also, the report that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, referred to as OPEC+ attained 102 percent compliance level with their oil production cuts agreements bolstered global oil outlook. Suggesting that demands for the commodity are likely not growing and could drag down prices in few weeks, especially when one factor in the reopening of Libya’s Sharara oil field, workers returning to operation in Norway and the Gulf of Mexico.

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Oil Prices Gain on Tuesday Despite Expected Surge in Global Oil Supplies

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Oil Prices Rise Despite Expected Surge in Global Oil Supplies

Oil prices gained on Tuesday despite Libya opening Sharara oil field for production, labour in Norway reaching an agreement with oil firms to return back to work and oil workers in the U.S returning to the Gulf of Mexico region after the Hurrican Delta.

Brent crude oil, against which Nigerian oil price is measured, gained 1.77 percent to $42.46 per barrel as at 11:15 am Nigerian time on Tuesday.

While the US West Texas Intermediate (WTI) crude oil gained 2 percent to close at $40.22 per barrel.

The improvement in prices was after oil prices plunged as much as 3 percent on Monday following a resolution reached by Libyan rebels and government to commence oil production at the nation’s largest oil field, Sharara Oil Field.

This coupled with labour agreement with oil firms in Norway was expected to boost global oil supplies and eventually weighed on prices and disrupt OPEC+ production cuts strategy.

However, prices surged after Nancy Pelosi said she would commence talks on $1.8 trillion stimulus package following President Trump’s return to the White House after he was rushed to hospital following a positive COVID-19 test.

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Joe Biden Win Could Boost Oil Prices, Says Goldman Sachs

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Oil Prices to Surge Once Joe Biden Wins -Goldman Sachs

Goldman Sachs, one of the world’s largest investment banks, has said Joe Biden win could boost global oil prices despite weak global economic outlook and COVID-19 negative impacts on the world’s growth.

The investment bank, however, remains bullish on both oil and gas prices regardless of the election outcome in November.

The bank sees oil and gas demand rising enough in 2021 to supersede election results but explained that Biden win could bolster prices by making production more expensive and more regulated for producers in the U.S.

In a note written by the bank’s commodities team on Sunday, it said “We do not expect the upcoming U.S. elections to derail our bullish forecasts for oil and gas prices, with a Blue Wave likely to be in fact a positive catalyst.”

“Headwinds to U.S. oil and gas production would rise further under a Joe Biden administration, even if the candidate has struck a centrist tone.”

Goldman Sachs explained that if incumbent, Trump, is re-elected with pro-oil and gas policies in place that “its impact would likely remain modest at best,” Goldman’s analysts wrote, “given the more powerful shift in investor focus to incorporate ESG metrics and the associated corporate capex re-allocation away from fossil fuels.”

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