Arthur is officially Hurricane strength. Gasoline (NYMEX:RBN14) demand destruction will be in its wake even after what might have been a bullish oil (NYMEX:CLN14) inventory report. Oil prices pulled back after a drawdown in crude supply. It seems the promise of more Libyan oil and the holiday driving demand destruction of Hurricane Arthur outweighed worries about Iraq and our dwindling crude supply.
A big drawdown in the Gulf coast again suggests that while the United States is not technically exporting crude we are exporting "product" or slightly tweaked crude oil that will blur the lines of what crude oil is and eventually bring down the export ban. Brent saw relief after the Libyan government said that it had negotiated a deal with a rebel leader to restart oil exports. Libya is producing 320,000 barrel of light oil and according to Dow Jones they plan to gradually return to oil to the market to protect OPEC interest.
Still going into the weekend there is a lot of geopolitical risk. Iraq is still in flux and Reuters is reporting that Saudi Arabia deployed 30,000 soldiers to its border with Iraq after Iraqi soldiers withdrew from the area, the Saudi-owned al-Arabiya television reported on Thursday. The Dubai-based satellite channel said it had obtained a video showing some 2,500 Iraqi soldiers in the desert area east of the Iraqi city of Karbala after they quit their positions on the border, leaving the border area with Saudi Arabia and Syria unguarded.
In Ukraine while peace talks resume it is possible that a war may not be avoided. While to markets are less worried because of an abundance of natural gas supply in Europe, a prolonged war would not bode well for cheap prices of oil down the road.
Today's jobs report may give oil some support as well. After a strong ADP report the market is anticipating a strong report today. ADP's June National Employment Report shows private payrolls adding 281,000 jobs last month, blowing away market expectations. Rising jobs means more oil demand or at least that's how oil traders may take it, assuming they can look past the storm
Bloomberg News is reporting that rising prices for beef, ice cream and lettuce mean Americans will spend the most ever for Fourth of July barbecues this year. U.S. retail prices for seven foods commonly consumed while grilling climbed 5.1 percent in May from a year earlier to the highest ever for the month, the latest data from Bureau of Labor Statistics show. Prices for ground beef are 16 percent higher than a year earlier, while ice cream climbed 1.7 percent and tomatoes soared 12 percent, government data show. Ground-beef prices are at a record amid a shrinking U.S. cattle herd. Drought in California has boosted produce costs.
Cattle (CME:LEQ14) and feeders showed no signs of stopping adding to their record highs overnight Gold (COMEX:GCN14) and Silver paused as the Dollar seemed to find some support. Not only will we move on jobs but on European Central Bank President Mario Draghi's news conference that may shed light on QE Euro-style.