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Crude oil rallies on Alberta oil sands and Saudi Arabia developments

Commodity markets are mixed today. A weak Chinese trade report, particularly a 10.9% drop in imports has metals under pressure, particularly copper, which could impact trading in mining stocks today.

Crude oil, on the other hand, is soaring again with WTI up 2.5% outpacing the 1.6% gain in Brent following a number of weekend developments. The massive forest fire in the oil sands producing region continued to grow. Suncor Energy announced overnight that it was able to fend off the flames from its operations but also that it has now shut down all of its operations in the region and successfully evacuated the 10,000 employees and Fort McMurray residents who had sought refuge at its facilities last week. In total it appears the oil sands operations to the north of the city provided shelter to 25,000-30,000 people depending on the report.

Overall, reports suggest that 1 million barrels per day out of the regions 2.5 mmbbl/d production has been taken offline by the crisis, but also that damage to oil sands facilities have been limited so production could bounce back relatively quickly once the crisis passes and employees are available to return to work but at this point it’s still unknown when that may be with the fires still raging...

In other oil related news, Saudi Arabia pushed out its oil minister Ali Al-Naimi, but   
As part of another round of reforms and indicated it plans to list the Saudi Aramco IPO on stock exchanges in New York, London and Riyadh.

Despite the weakness in metal prices, the Australian stock market managed to post a 0.6% gain today which bodes well for today’s trading in Canada. Oil shares may continue to attract attention today with a particular focus on oil sands giant Suncor Energy.

In currency action today, the big story so far has been a 1% broad based drop in JPY against other majors after Japan’s finance minister threatened to intervene in currency markets. Oil sensitive currencies like CAD, NOK and RUB are on the rebound today. GBP is also climbing again today against both USD and EUR.

USD index is still rising indicates that forex traders haven’t given up on a possible June Fed rate hike despite weaker job growth likely because Japanese wages confirmed rising US rages which suggest building inflation pressures.

Corporate News

Suncor Energy    kept forest fires away from its oil sands operations which have been shut down. 10,000 people have been safely evacuated from its facilities.

Economic News

Significant announcements released overnight include:

China trade balance        $45.5B vs street $40.00B
China imports            (10.9%) vs street (4.0%)
China exports            (1.8%) vs street 0.0%

UK Halifax house prices        9.2% vs street 9.6% and previous 10.1%

Germany factory orders        1.7% vs street 0.1%

Japan real cash earnings    1.4% vs previous 0.4%
Japan consumer confidence    40.8 vs previous 41.7

Announcements due later today include:

8:15 am EDT        Canada housing starts        street 193K


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