Crude Oil has resumed the uptrend again, after the retreat in November last year. The extreme measures taken by central banks and governments around the globe with tens of trillions of dollars being thrown into financial markets have helped keep Oil bullish, although the increase in energy prices in the second half of last year also contributed to the bullish momentum.

The stimulus programmes helped the global economy during the last two years as well, which means that the demand for energy has increased. There were fears about the omicron variant at the end of 2021, hence the pullback lower to $62 from $85, but this seems to be a light variant, which means that coronavirus is becoming like common flu now, so the sentiment improved in financial markets and energy prices resumed the uptrend, considering that there wouldn’t be any more lockdowns.

US WTI Crude Oil H4 Chart

US Oil has bounced off the 50 SMA 

Yesterday was the scheduled OPEC+ meeting and the members affirmed a moderate crude oil output increase of 400,000 barrels per day, not buckling to pressure from consuming countries to accelerate production. This improved the sentiment for crude Oil and US WTI now trades above $92.

The US non-farm employment report that was just released showed a strong jump in January, which means that the US economy is expanding fast, so the demand will remain high. US Oil is being supported by moving averages on the H4 chart. We will wait for another pullback to the 50 SMA (yellow) and probably open  a buy signal from there.

US January Non-Farm Employment

• January non-farm payrolls +467K vs +150K expected
• December payrolls were +199K
• Estimates ranged from -400K to +385K
• Two-month net revision +700K
• Unemployment rate 4.0% vs 3.9% expected
• Prior unemployment rate 3.9%
• Participation rate 62.2% vs 61.9% prior (was 62.8% pre-pandemic) (prior revised to 62.2%)
• U6 underemployment rate % vs 7.3% prior
• Average hourly earnings +0.7% m/m vs +0.5% expected
• Average hourly earnings 5.7% y/y vs +5.2% expected
• Average weekly hours 34.5 vs 34.7 expected
• Change in private payrolls +444K vs +150K expected
• Change in manufacturing payrolls +K vs +25K expected
• Long-term unemployed at 1.7m vs 2.0m prior (vs 1.2m pre-pandemic)
• The employment-population ratio, at 59.7% vs 59.5% prior (61.1% before pandemic)(prior revised to 59.7%)
• The number of persons not in the labor force who currently want a job was little changed at 5.7 million in January
• Full report

Note that the BLS introduced new population controls into the household survey derived from the 2020 census which won’t be incorporated into the historical data. There are some strange numbers in this data, like +61K in retail trade, temporary help +26K, and food services & drinking places +108K. That’s tough to square with the omicron wave.

WTI Crude Oil Live Chart