Crude oil started the day strong, testing the $68 level ahead of the weekly Energy Information Administration (EIA) report that was released at 10:30 is morning.   After the release, crude spiked up to $68.36, just shy of $68.45 resistance.  The release showed high gasoline demand.  U.S. gasoline supply saw a drawn down for the seventh week in a row.   Supply was down 3.0 million barrels to 236.0 million barrels, a low for 2018 and 1.7 million barrels less than a year ago. The report showed across the board inventory drawdowns.   

Commercial crude and oil stocks in the U.S. fell below the five-year average.  Getting the commercial oil inventory surplus below its 5-year average was a goal of OPEC’s two-year agreement that runs through year end.  Demand has been the main driver behind the drawdown.  Strong demand equals a strong economy. 

Weekly mortgage applications were up nicely for the week ending April 13.  The total composite was up 4.9%.  Refinance applications were up 4%.  The stand out was purchase applications, which was up 6%.  This was the highest level since February and prior to that it was not this high since September 8, 2017.

Interest rates were basically unchanged from the prior week.  According to MBA Chief Economist Mike Fratantoni, “Home purchase applications strengthened both on a week to week and year over year basis, following a two week slowdown driven in part by late season winter weather and the Easter holiday.  Conventional home purchase applications drove most of the increase in purchase activity relative to government purchase loans."

The Dow is struggling to stay in the green with the S&P and Nasdaq both up this session.  Advancers are leading decliners 1776/1072 on the NYSE and on 1653/1021 on the Nasdaq.  Consumer Discretionary, Energy, Industrials, Materials and Utilities are strong today, while Consumer Staples, Health Care, Real Estate and Technology lag.

Speaking of technology, in yesterday’s afternoon commentary, I told subscribers that I wasn’t falling for the IBM fanfare (“After the bell, Big Blue (IBM) and CSX are among the companies reporting quarterly financial results. I know the street wants to like IBM again, and the bar is low, but I'm worried about the results.”), and sure enough, IBM disappointed the street and is down $12.00.