Morning Petrospective – September 6, 2011

or the Friday before Labor Day, it was especially inappropriate for the latest monthly jobs report to show no net, new growth. There were 17,000 new private sector jobs, but they were wiped out by a loss of 17,000 government jobs. Unemployment remains at 9.1% and a number of ‘back-page’ factors like underemployment and people who have just given up and stopped looking for jobs were also worse in the latest figures. As a result, everyone is waiting for President Obama’s speech on Thursday in the hope that it will create hope that new jobs can be created.

We can’t say that hope is thick here. Confidence is not high. Many traders are already looking ahead to Operation Twist, which would involve the Federal Reserve buying long-term (10-year) obligations while simultaneously selling nearer maturities. Reuters described it recently: “Market participants now think the Fed will likely announce a plan to sell short-dated Treasury debt and use the proceeds to buy long bonds after its meeting later this month. The plan's goal would be to flatten the yield curve, lower long-term interest rates and stimulate the economy.”

The stock market has not really wanted to believe any of the negative factors that have been coming from the economic front. On Friday, the DJIA was down 253.31 to 11,240.26, as investors seem to have been slammed by the unexpectedly negative jobs numbers.

They probably should not have been all that unexpected. But, it still looks like investors were caught leaning the other way. Prices had apparently confirmed a double bottom earlier in the week, with a decisive breakout above resistance. Friday’s activity effectively negated that breakout. And oil prices suddenly turned lower after a week of walking on tip-toes near overbought levels and the upper Bollinger Band resistance levels. As we start the new week, equities and commodities, including oil, seem to be under pressure from a weakening economy. It will take something major from the White House or from the Fed to turn this around.

AP wrote on Sunday: “Labor unions and other liberal groups want Obama to push a major stimulus bill with hundreds of billions of dollars in new spending on infrastructure projects like roads, bridges and transit systems. That's not likely to happen. Constrained by budget cuts and a tight debt ceiling, Obama is expected to propose a limited package worth far less than the $787 billion stimulus passed in 2009. The plan will call on Congress to extend current payroll tax cuts and jobless benefits, spend money for new construction projects and offer incentives to businesses to hire more workers.” AP continued:

“James Hoffa, general president of the International Brotherhood of Teamsters, said Obama should challenge businesses with healthy bottom lines to spend more in the U.S. by hiring new workers, building plants and expanding operations. If they don't, Hoffa said, Obama should call them out as disloyal. "I think the president should challenge the patriotism of these American corporations that are sitting on the sidelines," Hoffa said Sunday on CNN's "State of the Union." He added, "We've got to turn this around and say, `Hey, we are an American company. We owe an obligation to America. Let's put America back to work.'"

Mr Hoffa’s comments are just the latest in an increasingly tense and hostile environment by both sides in an increasingly desperate struggle for the future of the economy. The two sides are miles apart right now.

FMX Newswire

FMX Newswire is an overnight news summary designed to meet the needs of professional energy traders. The content is to-the point, professional grade and not widely reported in the mainstream media. All sources are professional respected firms and newspapers.

Platts

• BP has won UK government approval for $700 mil North Sea oil field development.
• A US FTC report avoids any hard conclusions on the role of speculation and the price of oil.
• N Sea crude oil grade Forties breaches Dated Brent plus $2/barrel for first time.
• Ukraine's August natural gas transit to Europe down 17% month-on-month.

Bentek Energy

• Power Burn Analytic Report – US Power Burn Tumbes, 8 Bcf/d Over the Weekend.
• Industrial End Users Analytic Report – Sample Shows Demand Off After Labor Day in Texas, Southeast.
• Supply/Demand Balance Analytic Report – Weather Continues to Constrain Production, Drives Down Power Burn.
• Texas Observer – Holiday Weather Stamps Out Texas Demand.

Bloomberg

• Oil Advances in London for First Day in Four as SNB Pledge Weakens Dollar.
• Shaw Exercises Option to Sell 20% Stake in Westinghouse to Toshiba.
• Uranium Deal at 40% Premium Shows Nuclear Future After Fukushima: Real M&A.
• Libya Factions Jockey for Power as Splits Emerge After Driving Out Qaddafi.

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