Morning Market Overview
New York Mercantile Exchange nearest delivered oil futures and Brent crude on the Intercontinental Exchange settled at five-month highs Friday after bullish employment figures for March quashed concern poor jobs data for February was a harbinger that economic growth in the United States was set to slow sharply. The Bureau of Labor Statistics this morning reported a more-than-expected 196,000 jobs were created by the U.S. economy in March following an upwardly revised 33,000 job gains in February.
Employment growth averaged 180,000 per month in the first quarter compared with 223,000 per month in 2018, with the national jobless rate holding steady near a historic low at 3.8%. The Labor Department report was the catalyst market bulls were seeking, assuaging concern over slowing U.S. economic growth that bolstered the case for ongoing expansion in oil demand.
The International Energy Agency last month maintained their forecast for a 1.4 million bpd annual growth rate in world oil consumption in 2019, and projected a 500,000 bpd deficit in global oil supply for the second quarter. Production cuts of 1.2 million bpd by the Organization of the Petroleum Exporting Countries, Russia and nine non-OPEC oil producers during the first six months of 2019 have tightened the global supply-demand balance. U.S. sanctions on Iran and Venezuela that are exempt from the OPEC+ agreement have also diminished available supply on the world market, with a decline in Venezuelan crude output accelerated by a string of widespread power outages in the socialist state due to incompetence and corruption.
West Texas Intermediate and Brent had stalled at key resistance prior to the release of the jobs report, with today’s settlements solidly above their long-term 200-day moving averages seen luring in investors that have waited on the sidelines, along with WTI’s move above $63 bbl and Brent over $70 bbl. NYMEX May WTI futures settled up $0.98 on the session and $2.94 or 5% on the week at $63.08 bbl, well above the $61.63 200-day moving average. The front end of WTI’s forward curve continues to flatten, with the market flipping into a bullish backwardated market structure with July delivery. ICE June Brent futures rallied $0.94 today and $1.95 or 3% on the week to $70.34 bbl, the first settlement above $70 bbl since November, and above the 200-day moving average at $69.51. Brent futures are backwardated.
Climbing U.S. crude exports, which averaged 2.887 million bpd during March, 1.184 million bpd or 70% above the comparable year-ago period, continued to narrow Brent’s premium to WTI this week. On Tuesday, the spread narrowed to a $6.79 bbl seven-month low. NYMEX May RBOB futures settled at a 5-1/2 month high on the spot continuous chart at $1.9687 gallon, up 2.88cts on the session and 7.31cts or 4% on the week. NYMEX May ULSD futures settled at a nearly five-month high at $2.0424 gallon for a daily gain of 2.9cts and weekly advance of 6.9cts or 3.5%.