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OIL FUTURES: Crude rallies amid strong US jobs report, tropical storm concerns

Highlights

US May jobs report exceeds expectations

Fed likely to maintain hawkish policy stance

NHC forecasts first 2022 Atlantic tropical storm

  • Author
  • Chris van Moessner
  • Editor
  • Ankit Rathore
  • Commodity
  • Natural Gas Oil Petrochemicals

Crude futures moved higher in midday New York trading June 3 amid improved demand outlooks following a robust US May jobs report.

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Crude futures moved higher in midday New York trading June 3 amid improved demand outlooks following a robust US May jobs report.

At 1557 GMT, NYMEX July WTI was up $1.91 at $118.78/b and ICE August Brent traded $1.91 higher at $119.52/b.

US payrolls expanded by 390,000 in May, Labor Department data showed June 3. While the report showed hiring has slowed since April, when the economy added 436,000 jobs, the May jobs print still exceeded market expectations of around 330,000 new hires.

The stronger than expected jobs print boosted energy demand expectations, analysts said, although it also means that the US Federal Reserve is likely to maintain its hawkish policy stance into the summer.

"A robust nonfarm payroll report that suggests the consumer is still in decent shape," OANDA senior market analyst Ed Moya said in a June 3 note. "This oil market will remain tight throughout this summer, so there should be further upside for oil prices."

NYMEX July RBOB moved 3.68 cents higher to $4.2277/gal and July ULSD climbed 11.01 cents to $4.3485/gal.

This week also marks the start of the Atlantic hurricane season, a fact underscored by the National Hurricane Center for casting the formation of the first Atlantic tropical storm in the southern Gulf of Mexico. The system, which formed out of the remnants of Hurricane Agatha's landfall in the Mexican state of Oaxaca on May 30 as a Category 2 hurricane, is expected to impact southern Florida over the weekend.

"Based on global product inventories, the world can't afford even the possibility that some refiners may have to shut down," Price Futures Group analyst Phil Flynn said in a note. "While this storm will miss refinery row and while it may shut down some oil and gas production in the Gulf of Mexico, it is a reminder that hurricane season is here and this year any storm disruption will have a much bigger price impact than we have seen in recent years."

US gasoline and distillate inventories respectively stood 8.6% and 24% behind the five-year average in the week to May 27, US Energy Information Administration reported June 2.

Port condition whiskey has been implemented at the Port of Tampa, Port of St. Petersburg, and Port Manatee as of midday June 3. The condition means gale force winds are expected within 72 hours and that while the ports remain open for commercial traffic, vessels may be ordered to depart or else be diverted from the ports.