Jobs Data Sparks Oil Higher

Published on Friday, 03 February 2012 15:44 Written by Todd Shriber

New York, February 3^rd (TradersHuddle.com) – One of the best monthly employment reports the U.S. has seen since President Obama took office sparked a rally in oil futures today, helping crude break a streak of five consecutive losses. However, black gold did finished the week lower and the spread between U.S.-traded West Texas Intermediate and Brent crude resides in the $17 per barrel range. The Labor Department said 243,000 new jobs were added last month and that the unemployment rate sunk to 8.3%, the lowest level in three years.

As the world’s largest oil consumer, the U.S. is an integral part of the global oil demand equation and positive employment data here usually helps traders overlook rising inventories. Negotiations between Greece and its numerous credits may have kept a lid on oil futures today while Iran remained an issue in the oil pits. The country’s supreme leader warned of retaliation over "threats of oil embargo and war," Reuters reported.

With the Dow Jones Industrial Average posting a gain of around 150 points, Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX), the two largest U.S. oil companies, were big winners on the day. In late trading, the two Dow components were up 1.5% each though both gains were accrued on light volume. ConocoPhillips (NYSE: COP) lagged with a gain of under 1%.

Services names notched a strong performance on the day as well as the iShares Dow Jones US Oil Equipment Index Fund (NYSE: IEZ) added about 1.7% and the ETF was found pushing critical horizontal resistance around $57.50 late in Friday’s session. Schlumberger (NYSE: SLB), the world’s largest oil services company, was up more than 1%, but the real oil services standout was National Oilwell Varco (NYSE: NOV). NOV built on Thursday’s post-earnings pop and was up almost 6% on above average volume late in Friday’s session.

As we surmised yesterday, NOV made a splash with some acquisitions news. The company said today it will acquire NKT Flexibles I/S, a Danish designer and manufacturer of pipe products and systems, for $670 million. Morgan Stanley upgraded NOV to "overweight" from "equal weight" with a $100 price target, implying almost 25% upside from current levels.

Next week brings another barrage of oil earnings as Anadarko (NYSE: APC), BP (NYSE: BP), BHP Billiton (NYSE: BHP), Noble Energy (NYSE: NBL) and Total (NYSE: TOT), among others, step into the earnings confessional.