Jobs Report Slams Oil

It was widely expected that the May non-farm payroll number would be disappointing and that it was. That disappointment led to another sell-off in oil futures. After finishing May with a loss of 17%, U.S. oil futures did not start June on the right foot. NYMEX-traded crude plunged $3.30, or 3.7%, $83.23 per barrel, the lowest settlement since early October. In London, Brent crude, the global benchmark, slipped $3.44, or 3.4%, to $98.43 per barrel. That's the lowest price for Brent since January 2011. The economic data was so poor on Friday that even the juggernaut U.S. dollar traded slightly lower as the PowerShares DB US Dollar Index Bullish (NYSE: UUP) finished the day with a modest loss. Oil's Friday's woes were easily explained. In economic news, the Labor Department said In economic news, the Labor Department said employers added 69,000 new jobs in May, well below the 150,000 new jobs economists expected. The unemployment rate rose to 8.2% from 8.1%.

Beyond the jobs report, the Institute for Supply Management said its manufacturing activity index slipped to 53.5 in May from 54.8 in April. Overnight, there was more concerning economic data out of China, indicating that the world's second-largest economy continues to slow. Overall, it has been a rough 24 hours for the world's two largest oil consumers, the U.S. and China, and with crude futures flirting with $83, $75 could be the next technical stopping point.

Following a 6.3% loss last month, the Dow Jones Industrial Average opened June with a loss of 275 points or 2.2%. That is to say it was almost surprising to see Exxon Mobil (NYSE: XOM) lose "just" 0.9%, but the loss was incurred on heavy turnover and Exxon's chart is still broken to say the least. Chevron (NYSE: CVX) lost almost 2% on above average volume and looks poised to test its December 2011 low.

In another indication as to how bad this market is and how embattled the following stock is, shares of Chesapeake Energy (NYSE: CHK), the second-largest U.S. natural gas producer, plunged 8% on strong volume AFTER the company announced its largest oil discovery in its 23-year history. Chesapeake said the Thurman Horn 406H well in the Anadarko Basin of Texas and Oklahoma pumped 5,400 barrels of oil per day in its first eight days of operation.

The news should be viewed as good for Chesapeake, which is looking to cut $9.5 billion in debt by the end of the year and shift away from gas to oil production. Apache (NYSE: APA), which has also drilled near the Thurman Horn 406H well, fell 2.5% today. That stock has lost 17% in the past month.