Crude Drops over $4.50! + Futures Trading Levels for Oct. 5th

What you need to know for the last two trading days of the week

 By Mark O’Brien, Senior Broker

General: 

As yesterday’s price action in stock index and interest rate futures demonstrated, there are times when good data is bad news.  Yesterday, after three consecutive months of falling numbers, the Labor Department reported that there were 9.6 million job openings in the month of August in its Job Openings and Labor Turnover Survey, commonly referred to by its acronym: JOLTS.

Job openings have been slowly declining for the last 16-17 months from their April ’22 highs near 12 million – likely to the nod of approval by the Federal Reserve as it has raised rates in part to reduce labor demand in its efforts to cool the economy.  A larger-than-expected increase like August’s numbers helps make the prospect of further interest rate hikes less likely to be taken off the table, despite the Fed’s pause at the last meeting.

The JOLTS rebound also increases the scrutiny this Friday’s non-farm payrolls numbers will receive from traders.  Already, the E-mini S&P 500 has slipped ±400 points – a $20,000 per contract move – since its late-July push up to 4685, including yesterday’s 1.4% hit.

Energy: 

Last Wednesday, during the early hours of the Thursday session – so, technically just four trading sessions ago – November crude oil traded briefly over $95 per barrel.  This after a ±$3.50 per barrel advance above $94.00 per barrel during Wednesday’s session.  As of this typing, crude oil is in the throes of a ± $5.00 / 5.6% correction and within pennies of trading to $84 per barrel: an $11,000 per contract move.  Along side it, November heating oil corrected ±32 cents per gallon, a ±$13,400 per contract move.

Helping today’s sell-off was yesterday’s American Petroleum Institute report showing stocks at the Cushing, Oklahoma hub – where West Texas oil futures deliveries are processed – had increased for the first time in eight weeks.  Likely because no surprises accompanied the announcement, crude took the news in stride that Saudi Arabia and Russia announced that the voluntary production cuts currently in place will remain until the end of the year as planned, despite recent higher prices.

Softs: 

New all-time highs in orange juice futures just keep coming.  Last month, November orange juice futures gained another ±37 cent per pound – a ±$2,550 per contract move – to trade over $3.50 per pound.  Ongoing disease called citrus greening has damaged upwards of 75% of Florida’s orange crop.