Energy shares surge; Job ads hit 12½-year high

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Weekly oil market; ANZ job advertisements

  • What happened? Last week global crude oil prices rose by as much as 5 per cent to the highest levels in more than two years.
  • Implications: The S&P/ASX 200 Energy index surged 8.5 per cent last week, supported by rising global oil prices. In contrast the broader S&P/ASX 200 index, rose by just 1.6 per cent. That said, energy shares (+6.8 per cent) are still lagging the benchmark index (+10.7 per cent) in the year to date.
  • Other economic data of note: ANZ job advertisements rose by 7.9 per cent in May to a 12½-year high of 213,894 available positions. Ads have lifted for 12 successive months to be up 219.8 per cent from a year ago and up 38.8 per cent on the pre-pandemic level.

Job ads/vacancies are an important gauge on the direction of consumer spending. Movements in the energy prices can affect consumer spending, and in turn, prospects for retailers.

What does it all mean?

  • The JobKeeper wage subsidy may have expired but Aussie businesses look set to continue the hiring spree. According to ANZ, job ads jumped 7.9 per cent in May to a 12½-year high of 213,894 available positions. International border closures, skill shortages and skill mismatches present the biggest obstacles to recruiters and employment growth. That said, ANZ economists said that the current level of job vacancies “is now consistent with an unemployment rate of around 5 per cent” – below the April jobless rate of 5.5 per cent.
  • Aussie energy shares led gains on the S&P/ASX 200 index last week. The benchmark index hit all-time highs, underpinned by surging S&P/ASX 200 energy shares, which jumped 8.5 per cent – the strongest performing sector – bolstered by soaring global crude oil prices. Shares of Worley (+15.6 per cent), Santos (+12.2 per cent) and Oil Search (+11 per cent) all posted double-digit gains. Rising natural gas (LNG North Asia) and thermal coal prices (Newcastle) – which hit 9-year highs on Friday – have also boosted energy company shares. From an investor perspective, Oil Search and Karoon Energy are both highly leveraged to rising oil prices.
  • Global crude oil prices posted a second successive weekly gain with Brent crude prices up by 3.2 per cent in the past week to US$71.89 a barrel after topping US$72 a barrel on Friday for the first time since 2019. And the US Nymex price lifted by 5 per cent last week to US$69.62 a barrel, its highest level since October 2018.
  • Major global oil producers remain cautious despite the improving crude demand outlook amid expectations of a strong US summer driving season. With OPEC and its allies reluctant to raise production too quickly, there are concerns the crude market may tighten too much. In fact, Mike Muller from independent oil trader Vitol said the pick-up in US drilling and output will take “a long time” to return to pre-pandemic levels during an online conference yesterday. And Igor Sechin from Russian producer Rosneft warned of an impending oil supply shortfall as producers increasingly channel funds into a “hasty” energy transition. With OPEC+ influencing crude prices, all eyes will be on the coalition’s latest forecasts for supply and demand on Thursday.
  • The lift in global crude oil prices eventually feeds through to domestic pump prices with Australia a net importer of refined petroleum product from Asia. The key Singapore gasoline price hit a 20½-month high in US dollar terms last week. With regional prices on the ascendancy, the national average retail unleaded petrol price has hovered above $1.40 a litre for five successive weeks. Today, pump prices, according to MotorMouth, are as high as 173.9 cents a litre in Brisbane’s Newstead, 165.9 cents a litre in Sydney’s Edgecliff and 146.1 cents a litre in Melbourne’s Sandringham. Motorists should consult their fuel apps and shop around for the best deals with fuel offered below 125.9 cents a litre in Brisbane, 128.9 cents a litre in Sydney and 127.9 cents a litre in Melbourne today.

What do you need to know?

Weekly oil market

  • Over the week, Brent crude prices rose by 3.2 per cent to US$71.89 a barrel after topping US$72 a barrel on Friday for the first time since 2019. And the US Nymex price lifted 5 per cent to US$69.62 a barrel, its highest level since October 2018.
  • Last week the key Singapore gasoline price rose by US61 cents or 0.8 per cent to a 20½-month high of US$78.11 a barrel. In Australian dollar terms, the Singapore gasoline price rose by $1.77 or 1.8 per cent to a 16½-month high of $102.06 a barrel or 64.19 cents a litre.
  • Last week the national average price of unleaded petrol rose by 0.7 cents a litre to 142.4 cents per litre (c/l), according to the Australian Institute of Petroleum. And the national average wholesale (TGP) petrol price was up by 1.1 cents last week to 127.4 cents per litre and stands at 128.1 cents a litre today.
  • MotorMouth records the following average retail prices for unleaded fuel in capital cities today: Sydney 145.0c/l; Melbourne 137.0c/l; Brisbane 159.4c/l; Adelaide 134.1/l; Perth 128.8c/l; Hobart 140.3c/l; Darwin 140.0c/l and Canberra 145.3c/l.

ANZ job advertisements – May

  • ANZ job advertisements rose by 7.9 per cent in May to a 12½-year high of 213,894 available positions. Ads have lifted for 12 successive months to be up 219.8 per cent from a year ago and 38.8 per cent on the pre-pandemic level.

What is the importance of the economic data?

  • Weekly petrol prices data are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum (AIP). National average retail prices are calculated as the weighted average of each State/Territory metropolitan and non-metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions. AIP data for retail petrol prices is based on available market data supplied by MotorMouth.
  • The monthly ANZ Job Advertisements release is a leading employment indicator. Employers only seek additional staff if business activity is strong, and more importantly, if they expect that conditions will remain favourable in coming months. It takes around 5-6 months for the new staff to be added to the payrolls. But a fall in job advertisements would have an immediate impact on monthly employment estimates.

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