The Energy Select Sector SPDR ETF (XLE) opened lower on Friday and continued its decline during the trading session on Friday, while the Utilities Select Sector SPDR ETF (XLU) was gaining following the October jobs report.
Non-farm payroll employment increased by 161,000 in October, with minimal change in the unemployment rate at 4.9%, according to the Bureau of Labor Statistics. Employment in construction, manufacturing, wholesale trade, retail trade, among others, saw little change over the month.
In fact, as companies flock to the oil-rich Permian Basin in Texas, the state's employment numbers are some of the best in the nation. According to the latest Regional and State Employment and Unemployment Summary report, Texas had the third largest non-farm payroll employment gains for September with an increase of 206,800.
But as the jobs move South, states like Wyoming, where the oil jobs were once abundant, are now seeing "significant" unemployment rate increases. The Bureau reports that Wyoming and Oklahoma had a 1% unemployment rate increase, representing the largest change year over year. Wyoming was also the only state to experience a significant decline in employment over-the-year with a loss of 9,200 jobs, or a decline of 3.2%.
Even though oil is moving jobs across the country, it is not negatively affecting production. The U.S. crude oil inventories, which stand at 482.6 million barrels, are already at the "upper limit of the average range for this time of year," according to the U.S. Energy Information Administration. The EIA's weekly report shocked oil prices sending them down to $45 a barrel on Wednesday.
But the major overhang on oil prices is the Organization of Petroleum Exporting Countries, or OPEC. Pessimism is growing that no production quota deal will get done between the 14 cartel members. Goldman Sachs analysts think there is a declining probability that OPEC will reach a deal by the end of the month and "even lower odds of success."
Yet, if a deal were to come out of the Nov. 30 OPEC meeting in Vienna it would drive oil prices higher, and likely boost oil company stocks as well as there would be a plan to get the abundant global supply under control.