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Strong Jobs Report Changed Little

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Despite a stronger-than-expected jobs report, the oil market ended the day on Friday relatively unchanged with some stability just above $40 in the front. The Department of Labor, in its monthly employment review, reported more than 250k jobs were added to the economy in July, the strongest report in recent months. Such news is bullish for oil demand, and price. However, other than a mini-spike not long after the report was published, the oil market seemed to discount the news. After a few weeks of price malaise, oil did find some firm footing last week (after settling below $40 for the first time in nearly four months) and did manage to post a gain for the week. Oil supply builds could become the norm in the coming weeks, however, as refiners may trim activity due to economics (poor margins) and maintenance (post-summer gasoline season).

September WTI ended down thirteen cents on Friday (settling at $41.80), and traded between $41 – $42 all day long. The market received a jump start on Wednesday after the reported large gasoline draw, and September WTI gained more than two dollars off of the lows from earlier in the week. With domestic oil “demand” (i.e. refinery usage) potentially dropping in the coming weeks, a near-term price recovery may very well need to be led by the finished products (as it was last week). Product draws, based on both strong demand and reductions in output, are currently the bulls best hope.
RBOB and Heating Oil were both quiet on Friday. For the week, September RBOB posted a six cent gain while September HO was up a penny. Expect continued volatility in the relationship between these two products. Gasoline differentials in all regions east of the Rockies remain very strong.

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