Earlier this week the fundamentals had a grip on the market as the American Petroleum Institute and the Energy Information Administration both showed crude builds, which helped push the oil market down along with the strength of the dollar. While the supply and demand economic components have not changed, today seems to be a different story.
The market is up this morning following a week in which we’ve seen declines thus far, potentially amounting to its biggest weekly drop in over seven months. Today’s movement comes on the heels of the Labor Department’s jobs report released this morning showing nonfarm payrolls increasing by 151,000 for the month of August. The increase was less than the expected gain of 180,000 jobs. According to the Bureau of Labor Statistics, the unemployment rate remained unchanged at 4.9%, versus expectations of a drop to 4.8%. This most recent jobs report has somewhat lessened the likelihood of the Federal Reserve raising interest rates at its upcoming meeting later this month and in turn has the dollar trading lower today, pushing the commodities markets higher. In addition, comments by Russian President Vladimir Putin to Bloomberg stating an agreement between oil exporters to freeze output would be the right decision to support the market have propped prices higher. Despite persistent doubts of a production freeze agreement, Saudi Arabia’s Foreign Minister said that he was optimistic about producers moving to a common position on oil production. “We are beginning to have a meeting of the minds but it is a work in progress and we’ll see what happens in the meeting in Algeria. And I’m hopefully optimistic,” he told reporters. OPEC’s informal meeting is scheduled for September 26-28. Additional OPEC rhetoric and rumors on production strategy will continue to move the market over the next few weeks as the meeting draws closer.
Current prices have diesel and gas both trading higher by ~ $0.02 with crude strengthening by $1.00.