On Monday, the index of leading economic indicators rose slightly more than expected for the month of March, coming in with an increase of 0.8 percent versus the expected 0.7 percent.
This index appears to confirm that the Federal Reserve’s optimism about the economy may by correct.
The increase in the leading indicators was partly driven by the factory workweek, a positive sign for the manufacturing sector.
This is potentially bullish support for U.S. oil consumption as the workforce expands and people drive to get to their jobs.
March’s gains in the index of leading indicators point to accelerating economic growth over the next six months.
While crude prices have been rising since the start of April, inventories at key U.S. delivery points have drained away to refineries in the Gulf Coast, due to expanded pipeline capacity.
Over the past five trading days, the Standard & Poor’s GSCI Brent Crude index is higher by 2.17 percent.
Although crude oil inventories are low, the coming reduction in seasonal demand coupled with the expected gain in global supply capacity in 2014 should hold down prices.
The S&P GSCI Natural Gas index posted its biggest one-day gain in two months last Thursday after inventories rose less than expected in the U.S.
Natural gas supplies dropped to an 11-year low this winter as frigid temperatures in the East and throughout the Midwest boosted its demand for home heating.
The slow increase in inventories after the arrival of warmer weather is raising concerns whether natural gas producers will be able to replenish U.S. stockpiles in time for next winter.
The S&P GSCI Natural Gas index rose 1.72 percent over the past five trading days and is up 9.72 percent over the past month.
This article was written Laif Meidell, CMT, president of American Wealth Management, and portfolio manager of the AdvisorShares Meidell Tactical Advantage ETF (MATH).