–US Crude Oil-Related Imports +$3B; China NSA Bal -$23.2B

By Joseph Plocek

WASHINGTON (MNI) – The U.S. January trade data were worse than
expected as oil and other imports surged, but the effects were not all
price-related.

The January trade balance was -$46.3 billion as imports jumped
$10.5 billion and exports advanced a lesser $4.4 billion. December’s
trade gap was a revised -$40.3 billion.

In imports, more than $3 billion of the gain was oil-related, autos
posted +$2.7b, and machinery and apparel advanced. Both the price and
volume of crude imports gained. The imports gain of +6.7% (BOP basis)
was the biggest since March 1993.

After setting a near-term low last summer, the average imported
crude oil price was up 5.7% on the month to $84.34 a barrel, a high
since October 2008. Spot prices are still gaining. Imported oil prices
are now up 17% from their lows and have another 20% to 25% to rise to
match spot prices. The monthly volume of imported oil jumped 3% to 9.4
million barrels per day.

In exports, civilian aircraft posted -$939 million and
pharmaceuticals -$762 million. Most of the export gains appeared to be
knock-on effects from higher oil prices and auto parts.

The real January trade gap stands 9% wider than the Q4 average.
This should cut about 0.2 point from Q1 GDP growth.

Unadjusted trade balances by country illustrate Asia trade and the
oil problem. The balance with China was -$23.2 billion after -$20.7
billion in December, with Japan -$5 billion after -$5.9 billion, and
with OPEC -$9.95 billion (as imports surged to $14.2 billion, a high
since October 2008) after -$8.3 billion.

The 2010 full year trade gap with China was a record -$273.1
billion, or about -$23 billion a month, implying the most recent monthly
data are not extraordinary. However, the January 2010 gap was 20%
less at -$18.3 billion, so monthly trends in this number bear watching.

The bottom line is the worse January U.S. trade balance was due to
more than oil and probably shows the import-gathering economic recovery
effects of restocking and sales growth, as well as surging oil prices.
Ahead, the trade balance might deteriorate further because oil prices
have risen more.

**Market News International Washington Bureau: (202)371-2121**

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