NOW WHAT?

The complex, which had been under pressure all week on mounting skepticism that recovery was taking hold, reversed direction in overnight markets. Crude oil retook almost $1.00 of of Thursday's losses in early European trading as GDP results for Germany’s economy showed Q2 growth at the fastest pace since the country’s reunification two decades ago, driving expansion in the 16-nation euro area.

Still, concern that growth in nations on Europe’s periphery will crimp the region’s recovery, tempered the short lived elation. As we mentioned yesterday, the solidest evidence supports the encroachment of a deflationary influencesrather than recovery and that should speak volumes about energy demand growth, going forward.

Last Friday's non-farm payrolls report and the surprise jump in initial unemployment claims yesterday confirms that there has been no real improvement on the labor front. Up until now, whatever recovery there has been has been attributable to inventory restocking and governmental stimuli, neither of which are sustainable. 
 

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