This obscure indicator is flashing red for the US economy

The US economy is flashing warning signs, particularly the industrial and manufacturing sectors.

Demand for oil, and particularly so-called distillates - which are refined oil products such as jet fuels and heating oils - is crashing.

Here's the Barclays commodities team on the indicator:

January US demand for the four main refined products came in at -568k b/d (-3.9% y/y), compared with January 2015.

Distillates were the weakest sector, down 18% y/y. Whether or not the data itself point to much weaker underlying growth in the US economy is still open to question, but not much.

As illustrated in Figure 4, the scale of the decline in distillates demand in January has only ever been seen before during full-blown US recessions.

And here's that chart:

Barclays does cite some mitigating factors, such as unusually warm winter weather and the fact this is based on preliminary data that may get revised upward later on.

But it doesn't look great.