Soaring Jobless Claims (and Oil)

By Nicholas Jasinski |  Thursday, April 2

Oil Rally. The day began with a record-setting jobless claims number: 6.6 million. That's how many people applied for unemployment insurance for the first time during the week ending on March 28. The number doubles last week's record, and means that more than 10 million Americans have lost their jobs in the second half of March.

That's a devastating and shocking data point, but it wasn't necessarily surprising. The majority of the country is under some level of lockdown, with businesses from micro to massive closed and laying off their employees. U.S. stock indexes opened up slightly, but almost immediately fell into negative territory.

At a White House press briefing on Wednesday evening, President Donald Trump suggested that Saudi Arabia and Russia could soon end their market-share war that has roiled global oil markets this year.

“Just spoke to my friend MBS (Crown Prince) of Saudi Arabia, who spoke with President Putin of Russia, & I expect & hope that they will be cutting back approximately 10 Million Barrels, and maybe substantially more which, if it happens, will be GREAT for the oil & gas industry!” the president wrote on Twitter. He later added that the production cuts could be even greater, at 15 million barrels a day. U.S. stock indexes rose into the green, led by energy companies' shares.

A Saudi spokesman confirmed that the kingdom was calling for an emergency meeting of oil-producing nations to discuss how to proceed. The price of oil spiked as much as 35% at the day's peak.

Those gains pared back after a Russian official denied that a conversation between President Vladimir Putin and Crown Prince Mohammed bin Salman had happened. But West Texas Intermediate, the U.S. oil price benchmark, still registered its largest one-day percentage gain ever, up 24.7% today.

The demand side of the equation for oil markets doesn't yet look supportive of higher prices, with travel and economic activity depressed. The price is still down 60% from early January, even after today's gains. But the bounce was a welcome reprieve for the beleaguered S&P 500 energy sector, which rose more than 9% today.

Trading remained choppy in the afternoon. The Dow Jones Industrial Average, Nasdaq Composite, and S&P 500 all briefly dipped back into the red before rising again into the closing bell. The Dow ended up 2.2%, the S&P 500 rose 2.3%, and the Nasdaq gained 1.7%.