(Oil & Gas 360) by Michael Smolinski – While The Taking Out Of Those Who Kill, Maim And Destroy Is Fueling Recession Fear, So Much Needing To Be Done Fuels Our Bullish Outlook.
The near-month, closing futures contract price for WTI crude oil jumping to above $90 per barrel is increasing economic growth/ recession fear. The near-month closing futures price of West Texas Intermediate (WTI) crude oil trending down from above $85 per barrel in April of 2024 to near $55 in December was fueling economic growth as it reduced inflation. However, Operation Epic Fury closing the Strait of Hormuz has this price above $90 now.
Crude oil down below $60 per barrel helped the S&P 500 set its 7,000-record high. The jump to $90+ now dropped it to 6,636 today. The cost burden of oil falling (Figure 1) helped the S&P 500 set new record highs (Figure 2). The effort to end the death and destruction threat from Iran but not yet preventing Iran from closing the Strait of Hormuz, has dropped it as low as 6,636 today (bottom line).
Recession fears have also increased with Friday’s report that employment by Establishments dropped 92,000 in February instead of a small 50,000 increase expected. Friday morning’s Department of Labor report showed 158.466 million employed in the U.S. in February (Figure 3, red line), 92,000 fewer than January. Down 92,000, far short of January’s 126,000 increase and notably less than plus 50,000 expected helped the S&P 500 close down 90.69 for the day Friday to 6,740.02 (Figure 3).
The Population Employment Survey, more discouraging, is another reason to fear. Friday’s current population Survey is a larger reason to be economy concerned. Employment in January was revised down 1.423 million to 163.097 million (Figure 4, red line) changing last month’s report of a 528,000 job increase in January to an 895,000 decline. February, down 185,000 to 162.912 million is another reason for further recession decline. However, the changes resulted from a 1.4 million downward revision caused by changes to Census Bureau methodology, including updated demographic information about the population from the 2020 Census. It was not caused by 1.423 million suddenly becoming unemployed.
Employment decline is also suggested in the Job Openings and Labor Turnover monthly report. There were 7.658 million non-farm job openings in the U.S. in September (Figure 3, red line). However, decline followed with December down 386,000 to 6.542 million. 966,000 fewer than 7.508 million in December of 2024 (blue line).
By oilandgas360.com contributor Michael Smolinksi with Energy Directions
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