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US July payroll report under spotlight (Brent: $81.7)

Trends

Rotterdam (ARA) fuel oil - US$6 lower

Singapore fuel oil - US$1 lower

US Gulf - US$2 lower


Fundamentals lagging behind oil prices

US initial / contingent jobless claims and retail sales figures came out worse than expected yesterday. These numbers once again painted a bleak recovery picture ahead of today's comprehensive payroll report due at 14:30CET. Reuters analysts estimate 65,000 decrease in overall non-farm payrolls and 90,000 increase in private payrolls.

ECB's Trichet says no victory yet

ECB decided to keep the key interest rate at 1%. Trichet delivered a cautiously optimistic speech after the meeting pointing to better-than-expected Q2 figures and tame inflation numbers. He, however, left questions about timing of liquidity and stimulus withdrawals unanswered.

OPEC exports to fall in July (Reuters)

Oil Movements, a UK consultancy agency, estimated a 420,000 bpd decrease in OPEC seaborne oil exports for the month of July. On a side note, Brazil's oil exports slumped 37% in July, mainly due to restocking at a Petrobras refinery coming out of maintenance.

Today's other important numbers include German / British / Italian industrial outputs and US consumer credit.

Recommendation

We expect a volatile trading session after today's payroll report. Brent failed to break below a technical support just above $81/barrel yesterday. Worse-than-expected payroll figures might push prices down towards next strong support just below $79/barrel. We recommend taking advantage of market dips to hedge future consumption.