THE TRIALS OF JOBS

Crude oil prices firmed overnight finding support in a weaker dollar, but concerns over rising stocks and sagging demand must sooner or later be addressed.

Not unexpectedly, the dollar has sagged after the Labor Department produced a discouraging employment that showed a rise in overall  the unemployment rate to 5.1%, due to significant upward revisions in reported job losses from January and February and a reported loss of 80k jobs in March.

After the report, oil prices fluctuated, but are solidly higher in early trading. The market continues to oscillate in an extended range bounded by $100 - $105.

Uncertainty over future demand has undermined every rally recently, and if the jobs number is any measure of the pulse of the economy, it certainly has to be disappointing relative to energy demand growth, particularly when coupled with the jump in crude oil stocks recently.

With stocks building and demand slipping, it is difficult to justify prices at curent levels. Technically, the market's upward momentum seems to be fading, as evidenced by the series of declining highs, since the March 17th high of 111.80. Without a fresh supply threat, prices will be at risk of sliding back to test the critical value zone at $100/bbl.

The US is not alone in experiencing a creeping economic malaise. Data this week showed eurozone economies are slowing, with an unexpected fall in retail sales, suggesting consumer spending may be faltering, which might finally prompt the European Central Bank to cut interest rates later this year.

Increasingly, the ECB’s stated vigilance against inflation is coming at a steeper and steeper economic cost. The disconnect in approaches by our Fed and the ECB is remarkable

With the most important economic news of the week already digested, don't look for prices to trade much outside of a range described by Wednesday's low of 99.55 or above yesterday's high of 106.44. Markets need more than momentum to keep going.                                              

M. Fitzpatrick