Oil bears strongly push back OPEC’s production cuts [Video]

The week kicked off with a jump in oil prices, after Saudi announced that it will cut its production by 1mbpd.

US crude gapped 3.5% higher on Monday open, while Brent crude traded past $78pb. But the rally remained short-lived, and below the peak reached after Saudi Prince bin Salman had told oil bears to watch out a couple of weeks ago.

Asian equities were mostly in the green this Monday, to catch up with the US session rally following Friday’s jobs data.

The US dollar remains well bid against most majors, as the EURUSD is offered into the 1.07 level, and the USDJPY easily finds buyers below the 140 level, as yield spread between the US Japan 10-year bond spread remains favourable for buying the pair.

The US dollar remains under pressure against the Canadian dollar, on the other hand, as the OPEC-fueled oil prices leads to some inflows into the Loonie, while the AUDUSD spiked on Friday, boosted by a rally in iron ore futures, and defying a broadly bid US dollar.

In equities, the rising yields haven’t yet translated into selling pressure. The S&P500 rallied 1.45% on Friday, and is now approaching last summer peak, as the US debt ceiling agreement, and strong jobs data hinted that the US is still far from recession levels. The problem is that the US Treasury will issue a ton of new bonds from now to refill the Treasury’s General Account which got almost emptied during the debt ceiling crisis, and that will hit the market liquidity along with the Fed which will continue pulling away liquidity from the market within its QT program.