Central banks, unemployment and oil

Whilst we are digesting DOE data, BOE has cut rates by 50bps while ECB has stayed unchanged. ADP payroll on wed was better than expected but nevertheless weak, and friday's NFP will be another ugly number. Yesterday's improve Gasoline demand on the week suggest we might be heading for a gasoline crack recovery, but sources suggest the small stock build was mainly due to refiners stocking up due to the potential strike.

In the bigger scheme of things, given the unemployment figures expected to come in the next few months, SFOT fails to see how net demand will pick up. As in a study done by a respected energy institution, unemployment rate is a key driver of Gasoline demand, particularly into the driving season. Yesterday's data, though suggest that Gasoline now has the best demand/supply dynamics, as represented by days forward cover. Jet stocks, on the other hand has continued its stock build amid falling demand for air travel. The world's biggest consumers need a holiday neverthelss, and demand is there for a cheaper holiday. SFOT thinks that most will likely stay home for a cheap driving holiday rather than spending their much stronger currency now in europe, hence, is tempted to be long of RBOB vs Jet(or gasoil) using simple futures on pullback of this spread.