Poor U.S. Jobs and Manufacturing Reports Push Market Lower
October 3, 2019
Crude oil prices closed lower yesterday which was mainly due to poor US jobs report, a poor US manufacturing report and the EIA inventory report showing a build to crude oil stocks for the 3rd week in a row.
ADP reported yesterday morning that only 135,000 new private US jobs were created in September, which was well below the 152,000 new jobs increase expected. The ADP also revised down the August number to 157,000 from 195,000 jobs reported last month.
All this negative news weighed on the equities market and stocks sold off putting selling pressure on energies. The equities continue to see selling today and that has energy selling off again today also. It seems a bit unimaginable that in a little over two weeks since the Saudi attacks and the Saudis have totally restored production and the market has sold off back to below where it was before the attacks happened. I am not sure if all the gloomy economic outlooks are just bearish for energy or the attacks brought to many people into the market to quickly with the expectation for a more sustained upside. But whatever the case after over a week of the market trending lower it is rapidly approaching some support levels that if broken could open the market to more downside. With all the issues surrounding the market there could be in for a real battle and a lot of volatility around these lower support levels.
The DOE inventory report showed that crude oil stocks were up 3.1 million barrels. This was more than the market expected and this helped to put selling pressure on crude. Gasoline stocks were down 230,000 barrels and distillates were down 2.42 million barrels.
Total crude stocks are at 422.642 million barrels 18.678 million more barrels that last year at this time and 24.362 million barrels less than the 3-year average range.
Total gasoline stocks are at 229.976 million barrels which is 5.245 million less barrels than last year at this time and 2.863 million more than the 3-year average.
Distillate stocks are at 131.267 million barrels which is 4.864 million less barrels than last year at this time and 13.615 million less than the 3-year average.
Crude stocks are in good shape and gasoline stocks are on the lower end of the range but decent for this time of year. Distillate stocks have been on the lower end of the average range for some time now and that is a bit of a concern as refineries have been supposedly making more diesel in preparation of IMO 2020. The market continues to fight between low inventory and a decrease in global demand. Currently the negative news has been putting selling pressure on energy as these negative reports point to a much subdue demand outlook.
Propane inventory was up 971,000 barrels putting total stocks at 100.641 million barrels. The Midwest stocks were up 523,000 barrels and the Gulf Coast stocks were up 356,000 barrels. Supplies are good and the market expects stocks to continue to build so the current outlook is that prices will be pretty stable as prompt Conway prices approach the mid 30’s level selling dries up. As I have mentioned a lot of questions about crop drying and if that can pick up and increase demand it should give some support to the market.