The major indices are down slightly as oil reverses and heads about 2% lower after the EIA weekly inventories showed U.S. crude increased by 1.1 million barrels to 523.6 million barrels last week. This is the third week in a row that crude inventories have increased.  Gasoline inventories however dropped 2.8 million barrels, far exceeding the 1.1 million barrel draw that was anticipated. It takes about 2 times the amount of crude oil to produce gasoline (42 gallons equals a barrel). This doesn’t bode well for the commodity as this is the peak driving season and crude inventories should be dropping.  WTI is hovering around $42.

Although there has been renewed talk by OPEC for a cut in output, in July, Saudi Arabia had a record output of 10.67 million barrels per day. Production for OPEC countries was 33.11 million barrels per day, an increase of 46,000 barrels. So much for curbing production. While OPEC’s forecast for global demand remained unchanged for 2017, it increased for 2016. 

On the housing front, the MBA weekly mortgage index showed an increase of 7.1% in mortgage application volume, refinancing increased 10% and purchases increased 3% from the prior week. Interest rates on 30 year fixed rate for purchases of $417,000 or less dropped to 3.65% from 3.67%.