The monthly employment data for August earned a positive spin in most quarters. On the release, this sentiment was punctuated by triple-digit gainsin the equity markets coupled with a sizeable move up in Treasury yields, especially the ten-year note. The upward revision in the two prior months and a net job loss figure that was short of some of the trading community's greatest fears drove this conclusion. The energy markets were less sure, however, and oil prices quickly faded, yielding to a more sobering take.
Much has been written and discussed, rightly so, about the record amount of total petroleum inventories in the United States that currently exists.
Long ago, I freed myself of the yolk of relying on inventory levels as a primary predictor of future price action. It is important to recall that U.S. crude oil inventories were at record levels the month before prices neared a $150 per barrel in 2008, and robust inventories have been with the market for some time — to no avail or solace for energy bears.