CL Redux

http://www.fxstreet.com/fundamental/analysis-reports/insights-of-a-fundamental-analyst-2/2011/07/04/

I am trying to find some good fundamental research on 'employment data' forecast , here seems some good ones posted on JUL 4 th , 3 days before ADP JUL 7 th report
- this report forecast is close to ADP shown numbers
- of course all report are OFF with Govt. JUL 8 th report ..

<< this forecast by Bloomberg and all other of Good employment numbers seems the reason , why we got OIL shot up on MONDAY onwards from 92 levels on Friday .. >>

- We are projecting a ‘snapback’ in the headline June payroll number to +152,000 after ‘only’ a 54,000 increase in May. June Private Sector payrolls look to be up 183,000, 100,000 more than the 83,000 of May.

- We are projecting a ‘snapback’ in the headline June payroll number to +152,000 after ‘only’ a 54,000 increase in May. June Private Sector payrolls look to be up 183,000, 100,000 more than the 83,000 of May.

<< following item NEEDS LOTS of research , HISTORICAL trend played again in this JUNE 2011 REPORT that is below ESTImate numbers .... >>
- While our payroll forecast is above the consensus, history is not on our side. Over the past 11 years there were only 2 occasions when June payrolls exceeded the median estimate.
- In 2010, the first print on June payrolls was a ‘mere’ 5,000 above the median estimate, and in 2007 the first print was only 7,000 above the median estimate.
- In the other 9 years there were overshoots of as little as 20,000 to as much as 264,000.

- Since 1985 there have only been 7 occasions when June payrolls exceeded the median estimate. Since we have no compelling explanation for this skewed pattern of forecast errors, we prefer not to incorporate such into our June payroll forecast. But we do find this observation a little disturbing.

-----------------

JUNE 2011 Govt. report released on JUL 8 th ( one day after ADP data )
http://www.fxstreet.com/fundamental/analysis-reports/insights-of-a-fundamental-analyst-2/2011/07/08/

The private sector added 57,000, accounting for all the jobs created, with government employment shrinking 39,000 because of fiscal problems at local and state governments
- giving Net 57,000 - 39,000 = 18,000
 
Oil dips on jobs data; Brent/U.S. spread at $22


http://www.reuters.com/article/2011/07/08/us-markets-oil-idUSTRE7592LE20110708

- Money managers raised their net-long U.S. crude futures and options positions in the week to Tuesday, the Commodity Futures Trading Commision said on Friday.



Benchmark Brent crude pared losses by mid-afternoon, closing near flat on the day as news of reduced North Sea production helped drive prices up nearly 6 percent this week. Brent's premium to U.S. crude pushed above $22 a barrel, within $1 of its all-time record three weeks ago

- After lagging early, U.S. crude trading volumes outpaced Brent's, though Brent surpassed its 30-day average, while U.S. volumes were on track to fall just short.

- "Brent seems to have more speculative interest in it, along with the North Sea problems and missing African barrels, and the demand in Asia for similar barrels," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

TIGHT GLOBAL SUPPLY

Output from the North Sea Forties oil stream will slip to a two-year low in August, further reducing supply of the crude that helps to set the Brent benchmark.

- Brent's strength indicates the need for sweet crude like Libya's, even though "an expected increase in (U.S.) Gulf Coast supply should theoretically reroute some African light sweet crude toward the higher-priced European market", Jim Ritterbusch, president of Ritterbusch & Associates, said in a research note.
 
Views on OIL price :

First recap of what happened to oil price last 2 weeks.


1/ With DOE statement of 30 million barrels release of OIL , we saw oil reaching $89 low 10 days ago.
( WTI /Brent oil spread reached peak $19 that day )

2/ As equity markets (S&P) stabilized following week , OIL showed support at $90 + levels

3/ Q2 earnings are expected to be positive ( based on analyst estimates ) and JUNE 2011 month Employment number good forecast ( analyst avg. 100,000 ) , J P morgan upgraded oil prices for 2011 and 2012 .

4/ based on 3/ above i guess OIL gained from 93 to 97 last week , then on with ADP number release we saw 99.40 peak that day .

5/ with Friday actual Govt. payroll data of only 18,000 , CL tanked to 95.60 and recovered to 96.40 levels later .
- on this same friday WTI/Brent Spread reached peak of $22 and Gasoline RBOB is flat even CL lost 2%


my view for next week
--------------------------
1/ given friday WTI/Brent spread reached $22 and RBOB gasoline is FLAT , shows CL is oversold with the JOB report

- Next week Q2 earnings start pouring and are expected to be good earnings

- As long as S&P and EURO maintains friday close levels ( give or take few points ) , I see CL will maintain support at 95 level ..

- with 1 to 2% rise in S&P and modest gains/FLAT euro , CL can reach 99 level again ..

- CL will maintain 95 support level ( on CLose basis ) for the coming week unless S&P and EURO drop in a big way like 3 to 4 %
 
If you want to see the empty glass...

CL run from 89.80 to 99.40 was a little shy compared against other products, given the rally that took place (mostly in stock indexes), and as soon as we have a reason to sell, CL was the weakest, compared to indexes, his european cousin (brent) and also other commodities. So this is a weak signal, I dont know (nobody knows) if may be EIA barrels are helping this situation.

Anyway, 9570/80 area continues to be key for short-term expectations on CLQ11. In addition, next week will start the rollover from major holders to next front month as august expiration is 1 1/2 weeks away.

we'll see
 
Quote from Visaria:

Seeing a sell off at the start, maybe the debt ceiling stuff over the weekend? ES down too
More...

Too early to tell of course, but the attempts up on Friday were weak, so it's not surprising given that we opened around Friday's settlement.

The big spike is really not significant as it was more of a vacuum than anything else (only about 120 or so contracts traded in the first couple of seconds to create the spike). So, the range is effectively 96.20 to 95.70 .. between Friday's settlement and just above the low.
 
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