Downside pressures are building in the oil market as the dollar has rebounded. Somehow oil does not seem as expensive in dollar terms, especially when you get the sense that someday soon they may stop printing so many of them. While the market awaits the all important jobs report, it is obvious by the preponderance of data that indeed the economy is staring to mend. Even if this jobs report disappoints, my indicators suggests that the labor market is starting to recover.
I said earlier that I expect that we will see a big upward revision to our last big report as we did with the ADP. A blockbuster report may give oil a little boost, but It would also send the dollar and treasury yields rising and would cap the oil rally. Technically oil looks destined to fail and needs help from today's report or the prospect of rising inventories and a rising dollar could send oil subs tally lower to the low $80 a barrel handle.
Products are vulnerable as well. Winter weather and an improving economy have kept upward pressure on diesel. Gas of course continues its run of bad luck as more refinery problems keep gas prices from breaking. Bloomberg News reported that Motiva Enterprises LLC shut most of the production units at its 300,000-barrel-a-day refinery in Port Arthur, Texas. As if that wasn't enough Sunoco Inc. has planned to shutdown about half the production equipment at its Marcus Hook refinery in Pennsylvania tomorrow and several units at its Philadelphia plant on Feb. 1 for unplanned repairs, according to two people familiar with refinery operations there. This string of problems has kept gasoline higher than it should be and has kept many people from making wild bullish predictions about retail prices this year.
Phil Flynn is senior energy analyst for PFGBest Research and a Fox Business Network contributor. He can be reached at (800) 935-6487 or at firstname.lastname@example.org.