Another Milestone for Oil Payrolls. Thanks, O ...
Like everywhere else in America, it's payrolls day in the oil patch. And, really, all you can say at this point is:
"Thanks, O ... PEC"
This regular monthly Gadfly round-up of employment trends in the U.S. oil and gas business, with data from November, reaffirms the recovery theme. The most striking chart this time around is this one:
Yes, I know it's hard to see that little uptick on both lines over on the right, so here are the data shown in a different way:
As usual, I've calculated a crude estimate of the exploration and production industry's revenue using data from the Energy Information Administration and average benchmark price data from Bloomberg. I've then used data from the Bureau of Labor statistics on payrolls, hours worked and hourly earnings to estimate how much revenue is going to wages:
The thing to remember here is that these November figures came before OPEC's agreement injected some optimism into oil prices (and the onset of winter did the same for natural gas). So when the December data come in at the start of February, wages should represent an even lower proportion of revenue.
There are still clouds on the horizon. Natural gas prices have dropped sharply so far in January as winter hasn't been as cold as expected. And the broader wage inflation seen in Friday's employment data adds one more reason for interest rates to rise further, sooner. This puts pressure on emerging markets and, by extension, oil demand.
Plus, of course, it's early days for OPEC and company when it comes to delivering their promised supply cuts. For now, though, that promise is enough to help E&P firms get back to work.
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