After two days of big declines following OPEC’s decision last week to maintain production, Brent and WTI have bounced back about 2% this morning. The rally appears to be on comments from the US Energy Information Administration who forecast that US oil production may continue to decline this summer. That’s nice but: 1) Declining US production has been more than offset by rising OPEC production. This morning Iraq indicated that it has ramped its production up to 4 mmbbl/d with plans to grow its market share even as it expects oil to remain in the $50-70 range for the next 2 years at least. 2) We’re at a seasonal low for drilling activity in North America. Exploration peaks in the winter, drops off in the spring and rebounds in the summer as many drill locations can only be accessed during certain times of the year. In the coming weeks we may see US exploration activity pick up again but it likely to remain short of previous highs. 3) It still looks like Iran could come back to the market at some point relatively soon with nobody seemingly willing to make room for it. Oil markets have been acting like the US has become the swing producer and that cuts to US production would reduce global oversupply but comments out of OPEC countries indicate this isn’t that case. The global supply war continues full force with the US still losing ground, which may keep the upside for crude oil prices limited over the longer term. In other market action, USD had been trading lower overnight, but has rebounded in the last hour or so. CAD has been top dog rebounding along with the oil price with NOK also gaining ground. NZD also remains strong as higher than expected house price inflation has raised speculation that the RBNZ may not be able to cut interest rates at its meeting this week for fear of stoking a housing bubble. We’re also seeing a bit of a defensive rotation of capital today as the Greece situation continues to drag on, but it’s uncertain if traders are really reacting to the rumours and reports of the day or if it’s more because there hasn’t been much else in the way of news to talk about or trade on. The Greek treasury yield has climbed back above 11.0% with Germany and France up slightly but this has been partly offset by falling yields for Italy and Spain. Gold and JPY have also been on the rise while European and US indices are down moderately across the board as capital continues to pull out of stock markets. Corporate News Newmont Mining has agreed to purchase the Cripple Creek & Victor gold mine in Colorado from Anglogold Ashanti for $820M plus a 2.5% royalty FedEx announces 25% dividend increase Economic News Economic reports released overnight and this morning include: China consumer prices 1.2% vs street 1.3% China producer prices (4.6%) vs street (4.5%) UK same store sales 0.0% vs street 1.2% UK trade balance (£1.2B) vs street (£2.6B) Eurozone GDP 1.0% as expected Greece industrial production 0.4% vs previous 5.0% NZ QV house prices 9.0% vs previous 8.3% Australia home loans 1.0% vs street (2.0%) Upcoming significant announcements include: There are no major announcements scheduled for North America today CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.