Positive Jobs Report Good Sign for Economy
June 8th, 2020
The governments inventory update had crude stocks down 2.077 million barrels and the crude stocks at Cushing, Ok were down 1.739 million barrels. Gasoline stocks were up 2.795 million barrels and distillates were up a big 9.934 million barrels. The much bigger than expected build to distillates stocks had diesel selling off in yesterday’s trading. Diesel has lost it upside momentum and may need crude and or gasoline to drag it higher if the bulls are still on board to run this market up. US crude oil production fell by 200,000 bpd and is now down by 1.9 million bpd since 2-28-2020.
The ADP jobs report released yesterday reported was down 2.76 million which was much better than the 8.75 million expected and many took this as a positive. The governments non-farm payrolls number that will be released on Friday and it saw some revisions after the ADP number. The revisions took the decline from down 8.3 million to now down only 3 million. This would certainly be welcome news. But this will be a watched number moving forward as the jobs outlook is not positive at the moment. Bloomberg has been estimating another wave of job losses that will impact more white collar jobs, which would not be welcomed news for the economic recovery if their estimates come true.
EIA reported that total US gasoline product supplied (implied demand) rose by 295,000 bpd up to a total of 7.549 million bpd. US implied gasoline demand is down by 22.7% over the past 4-weeks versus last year and down by 15.9% based upon a cumulative daily average versus last year.
EIA reported total distillate product supplied (implied demand) fell by 548,000 bpd down to a total of 2.718 million bpd. US distillate demand is now down by 13.4% over the past 4-weeks versus last year and down by 10% based upon a cumulative daily average versus last year. Distillate demand has fallen more than expected due to the pandemic.
OPEC+ sources stated that OPEC leader Saudi Arabia and non-OPEC Russia have agreed on a preliminary deal to extend existing record oil production cuts by one month contingent on the other members compliance with current quotas. The meeting that they were hoping could happen today is a no go with the reason being how to deal with countries that have failed to make the deep supply cuts required under the existing pact. Saudi Arabia proposed to postpone the next OPEC+ meeting to mid-June to review compliance. Later in the day yesterday OPEC plus said they would plan to hold its Joint Technical Committee and Joint Ministerial Monitoring Committee meetings around mid-June.
OPEC+ is trying to be cautious and do what they can to support prices but not move them higher enough that US shale companies begin to bring production back up.