Soft data out of China and the United States have infused the overall market with a "bad news is good news" bid in the equity markets with relatively muddled responses from other market sectors including energies. The weak China PMI and less than expected U.S. inflationary data seem to be serving as the final bit of needed notice to market participants that any chance of a U.S. June rate hike is officially over. There are several key Fed members scheduled to speak today though it is doubtful that anything of significant substance would be iterated this close to the meeting.

For U.S. energy prices, the market continues to focus on the important Baker Hughes rig count data that on Friday showed another 13 rigs were taken off line. This comes on the heels of last week’s only 1 rig count decline that left some thinking that the bottom was in with respect to US shale production contraction. The market did, however, take this data in stride and remains within the recent tight range with the WTI continuing to hover around $60. 

Russia continues to plead its case to the global market as her oil minister urged other sovereignties to be wary of raising production based on the recent resiliency of the price action. This comes just a few days before the meeting with OPEC where it is widely held that the Federation (Russia) will attempt to persuade OPEC to reduce (or at least freeze) their production.  It is also widely assumed that this request will fall on deaf ears as OPEC and, more specifically the Saudis, have consistently stated there will be no cuts lest it be a global unilateral effort.  Fundamentally the market would seem to have to wait until the June 5 decision from OPEC is made official before finding and impetus for a breakout in either direction. 

The natural gas contract made its possibly final gasp to the downside in the early morning hours trading down to 2.60 before rebounding sharply into positive territory at 2.65. Last week’s better than expected build in inventories and a colder than expected front across the central US have left the contract somewhat deflated after the recent surge above 3 dollars.  Traders are looking for a reason to buy at these near historic levels as the market seems to be poised for an eventual sharp trade higher, though currently downward pressure is winning the price discovery battle.