Breaking $50, 50/50 Either Way

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Daily Settlement Prices

Oil prices ended a relatively quiet week on a soft note, settling lower after a surprisingly weak job report led a round of profit taking selling. Early Friday, the Government published its May employment data, released regularly on the first Friday of each calendar month. This month’s report showed a far smaller than expected build in new jobs, and also revised downward the March and April figures. The surprisingly weak report (in fact, it was the lowest number of new jobs added in five years) led to a strong round of selling, and the market never recovered from the weak start. Depending on your viewpoint, front month WTI is either primed to bust through $50 and move beyond, or has failed in its attempt to do so and should move lower soon.

July WTI began Friday near unchanged (just above $49 – where it was trading most of the week) but that changed after the early release of the jobs data. The soft report could portend a slowing economy, which would, in turn, suggest a slowing demand for oil. WTI dipped by about 50-cents in the immediate aftermath of the job headline, and slogged lower for the balance of the day. As is customary for a Summer Friday, trading volume was light and thus price action was more easily swayed. A late round of selling brought July WTI to its weakest point of the day near the close. This front month contract settled at $48.62 (down 55-cents on the day), breaking a long streak of $49-handle settles. For the week, July WTI was off by 70-cents, which broke a streak of three straight up weeks in the WTI market.

RBOB and Heating Oil each followed (or, perhaps, led) WTI lower, as these contracts ultimately closed down over two cents on Friday (and were also down for the week). Gulf Coast gasoline weakened a bit on Friday, after very strong moves earlier in the week, though the cash market in that region (and the South) continues to be strong (up for the week).

Published by PAPCO, Inc. (PAPCO)

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