Can the US consumer save the global economy? Again?! Well at least for the moment it sure seems that way. A global market meltdown seemed to end when the Conference Board blew away market expectations reporting that their Consumer Confidence Index came in at a stunning 63.3 up from 57.7 in April. The Present Situation Index increased to 30.2 from 28.2. The expectations Index improved to 85.3 from 77.4 last month. This was enough to get the market's mind off things. Just little things like the prospect of nuclear war in the Korean Peninsula and the prospect of bank failures in Spain and the total meltdown of the European economic system. Forget all of those silly details about those current 9.5% unemployment rate, for the time being consumers are felling better and all we have to do to save the global economy is to spend! And apparently the global market place is counting on it. The Conference Board declaration that consumers' appraisal of the labor market was more positive. Those claiming jobs are hard to get decreased to 43.6 percent from 44.8 percent, while those saying jobs are plentiful was virtually unchanged at 4.6 percent. Hey, now remind me again of what were we so worried about?
So now instead of counting on Asia or Europe to lead us out of this global recession, it looks like it is going to fall on the backs of the US and their shoppers. The constant shifting of the risk factors and the constant appetite for it is still the driving factor for all markets including oil.
That improving consumer confidence should signal a strong start to the summer driving season that officially starts this Memorial Day weekend and we are already seeing signs that the oil industry is expecting a big weekend. The API reported that US gasoline supplies in inventory fell by a healthy 3.2 million barrels as gas came out of storage and onto the racks getting ready to meet what sellers of gas expect to be an exceptional demand weekend. Those hopes are being encouraged even further by AAA that is reporting that this Memorial Day weekend we should see the first year over year increase in gas demand for the first time since 2005. AAA is forecasting a 5.4 percent increase in travelers going 50 miles or more from their homes this weekend. A total of 32.1 million people are expected to travel by plane or car. Automobile travel should increase 5.8 percent, to 28 million travelers. As far as the rest of the API report, there really were no surprises. The API reported that distillate stocks increased by 1.5 million barrels.
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