CANADA ECONOMICS

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FULL INFORMATION ABOUT THE TOOL: https://www.tariffinder.ca/

StatCan. 2017-05-09. Crude oil and natural gas: Supply and disposition, February 2017

Production of crude oil and equivalent products
19.3 million cubic metres, February 2017
+4.1% increase (12-month change)

Exports of crude oil and equivalent products
15.3  million cubic metres, February 2017
+4.8% increase (12-month change)

Source(s): CANSIM table 126-0003.

Canada produced 19.3 million cubic metres (121.4 million barrels) of crude oil and equivalent products in February, up 4.1% from the same month in 2016.

Chart 1   Chart 1: Production of crude oil and equivalent products
Production of crude oil and equivalent products



Non-upgraded crude bitumen production increases

Year over year, the production of crude oil and equivalent products continued to rise. The increase was primarily attributable to non-upgraded crude bitumen production (up 13.1% to 7.5 million cubic metres). The monthly production of non-upgraded crude bitumen consisted of mined crude bitumen (6.4 million cubic metres), plus in situ crude bitumen (7.0 million cubic metres), minus crude bitumen sent for further processing (5.9 million cubic metres).

Synthetic crude, up 3.3% to 5.1 million cubic metres, also contributed to the increase in production.

Meanwhile, light and medium crude oil (down 7.9% to 3.6 million cubic metres) and heavy crude oil (down 2.5% to 1.8 million cubic metres) continued to decline.

Chart 2   Chart 2: Production of crude oil and equivalent products by type of product
Production of crude oil and equivalent products by type of product



Production of non-conventional crude oil continues to rise

In February, crude oil production (excluding equivalent products) totalled 18.0 million cubic metres. Non-conventional crude oil production, which consists of non-upgraded crude bitumen and synthetic crude oil, rose 8.9% to 12.6 million cubic metres, marking the sixth consecutive monthly year-over-year increase.

Conventional crude production of light, medium and heavy crude oils decreased 6.2% in February compared with the same month in 2016 to 5.4 million cubic metres.

Chart 3   Chart 3: Production of conventional and non-conventional crude oil 
Production of conventional and non-conventional crude oil



Provincial production

Alberta produced 15.6 million cubic metres of crude oil and equivalent products, up 5.7% from February 2016 and accounted for 80.9% of Canada's total production. Meanwhile, Saskatchewan produced 2.2 million cubic metres or 11.3% of the national total, while Newfoundland and Labrador produced 1.0 million cubic metres or 5.4% of total Canadian production.

Refinery use of crude oil

In February, input of crude oil to Canadian refineries totalled 7.5 million cubic metres. Conventional crude oil represented 63.6% of the total, while non-conventional crude oil accounted for the remaining 36.4%. Light and medium crude oil (3.9 million cubic metres) and synthetic crude oil (2.4 million cubic metres) were the main types of crude oil used by Canadian refineries.

Exports and imports

Exports of crude oil and equivalent products rose 4.8% in February compared with the same month in 2016 to 15.3 million cubic metres. The vast majority of production (89.2%) was exported via pipelines, while other means such as rail, truck and marine transportation, accounted for the remaining 10.8%. Over the same period, imports to Canadian refineries increased 34.9% to 2.8 million cubic metres.

Chart 4   Chart 4: Exports and imports of crude oil and equivalent products
Exports and imports of crude oil and equivalent products



Closing inventories of crude oil and equivalent products totalled 19.7 million cubic metres in February, split between closing inventories held in pipelines and terminals (12.8 million cubic metres), refineries (4.2 million cubic metres) and fields and plants (2.7 million cubic metres).

Marketable natural gas declines

Canada produced 12.5 billion cubic metres of marketable natural gas in February, down 4.1% from the same month in 2016. Alberta (68.4%) and British Columbia (28.4%) accounted for most of Canadian production.

Total consumption by residential, industrial and commercial users rose 5.6% over the same period.

Exports of natural gas by pipeline to the United States rose 2.1% to 6.9 billion cubic metres and imports were up 74.5% to 2.9 billion cubic metres.

Chart 5   Chart 5: Marketable production, exports and imports of natural gas
Marketable production, exports and imports of natural gas




FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/170509/dq170509b-eng.pdf

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REAL STATE - HOUSING BURBLE

The Globe and Mail. MORTGAGES. May 09, 2017. Home Capital sells up to $1.5-billion in mortgages; shares surge
NIALL MCGEE - CAPITAL MARKETS REPORTER

Home Capital Group says it plans to sell up to $1.5-billion of its mortgages to an unidentified third party – a move that may take some financial pressure off the company, as it continues to navigate through a funding crisis.

The mystery buyer has agreed to buy $1-billion in qualifying uninsured mortgages, expressing “immediate interest” in commitments and renewals for as much as $500-million. The company’s entire book of mortgages is in the region of $18-billion.

Home Capital's stock soared over 19 per cent in early trading on the Toronto Stock Exchange.

In a release early Tuesday, interim chief executive officer Bonita Then called the transaction “another step forward in the company’s efforts to restore confidence,” in its operations.

The rise and fall of Home Capital

Home Capital didn’t announce the price that it will receive for the mortgages, but the transaction may buy the alternative mortgage lender some extra breathing room as it searches for a buyer. The company said it is working “very hard to develop additional sources of funding”.

About two weeks ago, Home Capital signalled it may sell itself, saying it had retained RBC Dominion Securities Inc. and BMO Nesbitt Burns Inc. to explore “strategic options.” The move was sparked amid a run on the bank and severe selling pressure in the shares. So far no buyer has stepped up to buy the company outright.

Home Capital also signalled Tuesday that its business model is shifting. The company says it will increasingly focus on selling its mortgages rather than keeping them on its balance sheet.

“We are tightening our lending criteria and reducing some of our broker incentive programs and expect that will result in a decline in our originations and renewals,” Ms. Then said in the release.

Home Capital’s previous strategy was based on the firm’s ability to raise money from mortgages through raising money from investors through high interest savings accounts and GICs. In recent weeks the firm’s on demand deposits have plummeted from roughly $2-billion a month ago to $146-million. The run on deposits was sparked after a funding crisis arose after the Ontario Securities Commission (OSC) brought a series of allegations of faulty disclosure against the company and a number of its former executives in April. Home Capital has said the allegations are “without merit” and none have been proven.

Home Capital has seen its GIC balances remain relatively stable in recent weeks, which has been an important offset against the run in the on demand deposits. The company says it plans to pay back a debt instrument worth $325-million that is maturing in a couple of weeks.


The company also revealed in the release that the $2-billion line of credit was led by Healthcare of Ontario Pension Plan (HOOPP) and was syndicated to a number of other parties including investment banks Credit Suisse and Goldman Sachs, as well as private equity and asset management firm Fortress Investment Group. The company has drawn down $1.4-billion so far of the credit that was set up a little less that two weeks ago.

The Globe and Mail. ANALYSIS. May 09, 2017. Home Capital crisis not a sign of ‘roach motel’ in Canada’s mortgage market
MICHAEL BABAD

Briefing highlights

• Home Capital crisis no sign of ‘roach motel’
• Finds buyer for Home Trust mortgages
• Global markets largely on the rise
• VIX closed at lowest since 1993
• New York poised for higher open
• Loonie at about 73 cents
• Valeant swings to quarterly profit
• George Weston raises dividend

“Canada's Minsky moment? No, it's complicated.” Deutsche Bank

Observers are telling the short-Canada crowd in no uncertain terms that the crisis at Home Capital Group Inc. is not a Minsky moment.

Or, as Deutsche Bank put it, there’s no “undiscovered roach motel lurking” in Canada’s mortgage market.

“I find that some global accounts are in search of evidence that the problems that plagued non-traditional or non-bank players in markets like the U.K. and U.S. before the global financial crisis are becoming evident in Canada,” said Derek Holt, Bank of Nova Scotia’s head of capital markets economics.

“This is motivating a next-big-short mentality that has been hanging over the Canadian market for weeks now.”

This comes as the company said today it has found a buyer for Home Trust mortgages, extending a lifeline.

First and foremost, there is no broad threat in Canada, said Mr. Holt and others, noting the differences between the country’s mortgage market and those of other countries.

But Canadian banks are being asked just what the hell is going on.

Of course, the bloodletting at Home Capital also comes amid rising angst over the Toronto-area housing market, marked by the aggressive actions of the Ontario government to cool the market down.

This has been a factor, but not the sole or even primary spark, in the erosion of the Canadian dollar.

Home Capital, which is scrambling to overhaul its board and take other steps amid a regulatory probe, a collapse in its stock price and the absolute hemorrhaging of deposits, is a small player in a vast market.

And often ignored, Mr. Holt said, is the “far more limited role of more lightly regulated non-banks in Canada.”

As this chart illustrates, commercial banks are by far the heavyweights in the mortgage market, followed by credit unions and caisses populaires, which are far behind.



Deutsche Bank agreed this is no Minsky moment – a phrase coined in the 1990s and based on the work of economist Hyman Minsky – which marks the crash of an asset after a spectacular, and speculative, run-up.

“The liquidity run on Home Capital Group has sparked renewed investor focus on the overheated housing market in Canada,” said Deutsche Bank macro-strategist Sebastien Galy and economist Brett Ryan.

“We want to be perfectly clear: This is an isolated event that has no impact on our broader outlook for the Canadian economy,” they added in a report titled “Canada’s Minsky moment? No, it’s complicated.”

Complicated, indeed.

Mr. Galy and Mr. Ryan noted the inflated Vancouver and Toronto housing markets, government intervention in British Columbia and Ontario, swollen household debt levels and the mix in the mortgage market of banks and other players such as mortgage investment corporations.

Canada is not even near the type of meltdown in the U.S. that sparked the financial crisis, they said, citing, among other things, these statistics on arrears.



“In short, while there is never just one cockroach – there is by no means an undiscovered roach motel lurking in Canada.”

Stocks on rise

Global stocks are largely on the rise so far as observers note the exceptionally low volatility in the markets, with the VIX having closed at its lowest since late 1993.

“While the market remains resilient, it is becoming increasingly clear that the breadth of the gains, i.e. the number of companies driving the market higher, is getting weaker,” said IG chief market analyst Chris Beauchamp.

“Healthy rallies are built on broad-based gains, not on just a few big names like Apple doing all the work,” he added.

“This reinforces the idea that the foundations of the rally are becoming increasingly shaky, and that the clear out, if and when it comes, will be swift and brutal.”

Tokyo’s Nikkei lost 0.3 per cent, but stocks are gaining in Europe and poised for a stronger open in New York.

Hong Kong’s Hang Seng rose 1.3 per cent, and the Shanghai composite by just shy of 0.1 per cent.

In Europe, London’s FTSE 100, Germany’s DAX and the Paris CAC 40 were up by between 0.3 and 0.7 per cent by about 7:15 a.m. ET.


New York futures were also up, while the Canadian dollar was at just about 73 cents (U.S.).

How markets ended Monday

S&P/TSX Composite Index

+1.4%

S&P 500 Index

+0.3%

$U.S./bbl

WTI Crude (Nymex)

+2.0%

U.S. dollar

Canadian Dollar

+0.6%

THE GLOBE AND MAIL » SOURCE: QUANDL

REUTERS. May 9, 2017. Home Capital says unnamed party plans to buy $1.10 billion in mortgages

(Reuters) - Home Capital Group Inc HCG.TO said on Tuesday a third party intends to buy up to C$1.5 billion ($1.10 billion) in mortgages.

The third party has indicated its non-binding intention to buy as much as C$1 billion in uninsured mortgages and to buy, or accept, commitments for up to C$500 million in insured mortgages, the company said.

"This is another step forward in the company's efforts to restore confidence in our operations," Board Chair Brenda Eprile said in a statement.

Depositors have withdrawn more than three-fourths from Home Capital’s high-interest savings account and the company has been charged by the regulator of misleading the investors. The company expects the balance in its high-interest savings account (HISA) to fall to about C$146 million on Tuesday from C$192 million on Monday, it said.

Home Capital has become a rare Canadian financial institution to face a run on its deposits at a time when Ontario, Canada's biggest province, has taken a series of measures to cool its red-hot housing market.

Canadian banks have enjoyed a stellar reputation and they dodged the global financial crisis by avoiding risky mortgages that sparked the collapse of many U.S. financial institutions.

Home Capital said it would continue to offer mortgages in most of its existing product categories, but at reduced volumes. The company also said it plans to tighten lending criteria and reduce some of its broker incentive programs.

On Monday, the company said it hired three well-regarded Bay Street professionals as new board directors and named a new chairwoman as it continues its management overhaul.


(Reporting by Arathy S Nair in Bengaluru; Editing by Savio D'Souza and Nick Zieminski)

BLOOMBERG. 2017 M05 9. Home Capital Sells $1.1 Billion in Mortgages to Third Party
by Allison McNeely , Maciej Onoszko , and Gerrit De Vynck

• Deal comprises about 10 percent of the lender’s mortgage book
• Also announces Credit Suisse, Goldman part of HOOPP syndicate

Home Capital Group Inc. agreed to sell as much as C$1.5 billion ($1.1 billion) worth of mortgages and loan renewals to an unidentified buyer as the struggling Canadian lender looks for ways to shore up its balance sheet and restore investor confidence.

The deal includes up to C$1 billion of uninsured mortgages and C$500 million of insured mortgages, or about 10 percent of the company’s total mortgage book.

“This purchase arrangement is designed to give us the ability to continue to serve as many customers as possible in the mortgage broker channel,” Bonita Then, interim chief executive officer, said in a statement Tuesday. “Meanwhile, we continue to work very hard to develop additional sources of funding.”

Home Capital, facing scrutiny from Canadian regulators for misleading investors about possible mortgage fraud, has faced a run on deposits, forcing it to consider a sale. The Toronto-based company’s troubles have sparked concerns the fallout could lead to a broader slowdown in the Canadian real estate market.



Home Capital’s high interest deposits continued to dwindle, falling to C$146 million as of May 9 from almost C$2 billion five weeks ago. Its guaranteed investment certificate deposits stood at about C$12.6 billion as of May 7. The company’s available liquidity and credit capacity totaled some C$1.7 billion, which includes C$1.1 billion of liquid assets and C$600 million of the undrawn facility led by Healthcare of Ontario Pension Plan.

"What this news really does is address a lot of the near-term liquidity challenges that they’ve been dealing with in terms of all the deposits that were running out the door and questions about their ability to sell more GICs down the road," said Jeff Fenwick, an equity analyst at Cormark Securities Inc. The arrangement gives them time to consider strategic options for the business, he said.

Home Capital didn’t disclose terms of the mortgage sales. The company is due to report first-quarter results on May 11 after they pushed back the date from May 3. Its shares surged 20 percent on Monday, paring to 68 percent their slide since April 19 when the Ontario Securities Commission made public its allegation that the company misled investors.

Paying Back Debt

Home Capital on Tuesday also announced that the C$2 billion credit line it received from HOOPP had been syndicated to Credit Suisse Group AG, Goldman Sachs Group Inc., Fortress Investment Group LLC, and a "major North American financial institution.” It pledged to pay back all of a C$325 million bond on its maturity date, May 24.

Canadian Imperial Bank of Commerce said Monday it has a Canadian institutional buyer for as much as C$100 million of the 2.35 percent bonds at 92.5 cents on the dollar. The offer closes at 5 p.m. in Toronto Tuesday.

Home Capital is also tightening its lending criteria, which would lead to fewer new mortgages. The focus will be to originate mortgages it can sell, rather than keep on its balance sheet, adding it will result in “lower overall mortgage balances, increased costs and reduced levels of profitability in the near term.”

The latest moves come after Home Capital on Monday announced a continued shake up of its board and suspended dividend payments.

The ripple effects are also being felt across Canada’s financial markets. The Canadian dollar fell to a 14-month low against its U.S. peer last week, bank stocks suffered, while at least two sales of mortgage-backed securities have been put on hold.


Yet the risk from Home Capital doesn’t stem from the company’s size or linkages -- it holds only about 1 percent of Canadian mortgages. However a disorderly fallout from Home Capital would damage a sector which is driving Canadian growth. Real estate, residential construction and finance sectors were responsible for around two-fifths of output in Canada’s fastest growing provinces.

SCOTIA BANK. ECONOMICS. ANALYSIS. May 8, 2017. Scotia Flash: Canadian Housing Starts Above 200K For Five Straight

FULL DOCUMENT: http://www.gbm.scotiabank.com/scpt/gbm/scotiaeconomics63/scotiaflash20170508.pdf

TD BANK. TD ECONOMICS. Analysis of economic performance and the implications for investors. The analysis covers the globe, with emphasis on Canada, the United States, Europe and Asia. ANALYSIS. May 8, 2017. Canadian Housing Starts

FULL DOCUMENT: https://www.td.com/document/PDF/economics/comment/CanadianHousingStarts_Apr2017.pdf

RBC. Economic Research. ANALYSIS. May 8, 2017. Canadian housing starts maintained momentum in April, but will it last?

FULL DOCUMENT: http://www.rbc.com/economics/daily-economic-update/CA%20Housing%20Starts_Apr2017.pdf

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The Globe and Mail. May 08, 2017. CETA, Brexit pave path to better Canada-Ireland trade relations: Irish PM Enda Kenny
DAVID PARKINSON - ECONOMICS REPORTER

Enda Kenny had never made a state visit to Canada in his six years as Ireland’s Prime Minister. But the shifting global trade winds finally blew the Irish Republic’s leader to our shores.

Mr. Kenny made the trip last week to talk with his Canadian counterpart, Justin Trudeau, as well as business leaders, about the bilateral potential offered by the Comprehensive Economic and Trade Agreement (CETA), the landmark trade deal signed last fall between Canada and the European Union, the huge 28-country economic union of which Ireland is a member. It marked the first time in 12 years that an Irish prime minister had made a state visit to Canada; but with the advent of CETA as well as Britain’s intention to leave the EU (the so-called Brexit), Mr. Kenny crossed the pond to make the case for the two countries, with historical roots and a shared language, to deepen their relationship.

On Friday, he sat down in Toronto with a small group of Globe and Mail senior editors and reporters to chat about trade, Brexit, Ireland’s economic challenges and housing bubbles – a hot issue in Canada and one that Ireland is all too familiar with, following the collapse of its own housing market nearly a decade ago. Here are the highlights of that conversation.

On Ireland’s housing boom, bust and lingering echoes

“I think we’ve learned lessons in the last number of years. Obviously, we can never go back to what happened before, with a reliance on taxes coming from the construction sector to run the country.”

“Before the recession, Ireland was building 90,000 houses a year. We had an influx of about 130,000-140,000 labourers from different European countries, who were quite entitled to travel within the European Union; that’s allowed. When people weren’t able to get mortgages, not able to repay when the tightness came, the construction sector collapsed. We went from 90,000 houses a year to 9,000 houses a year. And 100,000 people left.”

“It means now that Ireland faces a real challenge here in trying to catch up. We have real opportunity for investment, but [investors] are looking for quality housing, they’re looking for infrastructure in terms of water and energy and communications and road systems. … Looking at Ireland in 2030-2040, there’s a million extra people, you’ve got to build a half a million extra houses, you need schools and hospital extensions and other facilities. It means that you have to retrain people in new methods of building, [and] you have to encourage people to come back. … We’ve put an unprecedented level of interest into dealing with house supply, because supply is key to demand here. And we are behind in terms of supply, because of that total collapse.”

On CETA

“We strongly support the CETA arrangement; 99-per-cent abolition of tariffs is a brilliant opportunity both ways, both for Canada to invest into Europe, and to invest through Ireland into Europe. Fifty per cent of Canada’s foreign direct investment goes to Britain; you’ll be the only [other] English-speaking country [in CETA] when Britain has left [the EU]. We see that opportunity there, and we intend to follow it through. I discussed it with Prime Minister Trudeau [on Thursday].

“There’s massive potential here. Canada is very much like ourselves.”

On Ireland’s challenges as an export-dependent economy

“As an island, we have to export what we produce. Therefore, it’s got to measure up in terms of credibility, quality and integrity of product. We have serious challenges arising from Brexit, particularly in the agrifood and drink sector … When we consider that, we’ve diversified over the past number of years, from being almost totally dependent upon the British market, to expanding into the [EU] single market and what that allows us to do. [We have] a hundred trade missions planned for this year.”

On the opportunities to cash in on Brexit

“It’s very disappointing that this has happened, but now we’ve got to deal with it.


“Financial houses are not going to hang around [London]. They’re going to make decisions to move sections or sectors of their business, and they’re not going to wait for politicians talking interminably about who does what, or where this should go, or whatever it is. I see announcements from financial houses, they’re going to move sectors, and they’re going to choose locations. We’re going to compete for those locations, against Frankfurt, Amsterdam, Luxembourg, Paris or even New York. But financial houses say to me, ‘What do we want? We want access to the single market, we want access to European money, we want access to an English-speaking country, and we want access to talent.’ We have all that. So we are going to get business out of Brexit.”

The Globe and Mail. OPINION. May 07, 2017. Angry about U.S. duties on Canadian lumber? Blame B.C.
BARRIE MCKENNA

OTTAWA — Buried in the 124 pages of the U.S. trade case against Canadian lumber is a surprising revelation about how the Trump administration tallied its duties.

The prevailing narrative is that the U.S. hit Canada with duties of up to 24 per cent because the provinces are selling their timber too cheaply to lumber companies – thus, a subsidy, so the Americans say.

That’s only part of the story. A significant chunk of the penalty is due to log export restrictions that exist only in British Columbia.

The bizarre, and arguably unfair, result is that lumber producers across the country are being punished for the forest policies of one province.

Absent of B.C.’s export controls, Canada’s lumber industry would be facing something closer to a nuisance tax today, rather than a punishing throttle on its exports. And it could wind up costing lumber companies hundreds of millions of dollars per year, and valuable market share in the United States.

The U.S. Commerce department investigated five companies – three in B.C., one in Quebec and another in New Brunswick. It calculated the alleged subsidies each receives and then applied unique rates. Outside of B.C., the duties are relatively low – about 3 per cent for St. John-based J.D. Irving Ltd. and 13 per cent for Montreal-based Resolute Forest Products Inc. Inside B.C., the rates are much higher – 24 per cent for West Fraser Timber Co. Ltd., 20 per cent for Canfor Corp. and 19.5 per cent for Tolko Industries Ltd.

Every other lumber exporter in Canada is now paying a weighted average of those five rates, or 20 per cent. As much as a third of the nationwide duty reflects the effect of federal and provincial restrictions on B.C. log exports.

Those restrictions, in place since the 1880s, are an aberration in Canada’s generally open economy. Indeed, logging is a rare example where governments dictate to private interests what they can export, for reasons other than national security.

Federal and B.C. officials should have seen this coming. Economists in Canada have warned for years that the policy lessens competition for logs, increases the supply of timber available to mills in B.C. and suppresses prices by up to 50 per cent. And that lowers the cost of finished lumber, such as two-by-fours, destined for the U.S. market.

The Commerce department agreed. It calculated that a quarter to a third of the total duties imposed on the three targeted B.C. companies is directly attributable to log export rules, which are applied by both Ottawa and B.C.

The United States isn’t alone in raising objections. Japan, China and South Korea have also complained about Canadian log-export restraints. Japan and China almost certainly will raise the issue in free-trade talks with Ottawa.

It’s still unclear whether the United States will be able to make its case stick. Canadian lumber has been targeted four previous times since the 1980s, successfully fighting off the duties each time through litigation.

But the notion that Canada is entirely blameless is misleading. Eric Miller, a fellow at the Woodrow Wilson International Center for Scholars in Washington, argued in a recent report that log-export restrictions are a blatant subsidy that is illegal under both the North American free-trade agreement and World Trade Organization rules.

“The peculiar structure of the regime guarantees B.C. wood processors access to cut-rate inputs at the expense of domestic timber harvesters, [creating] an array of distortionary effects up and down the supply chain,” according to Mr. Miller, a consultant and former Industry Canada official.

Log-export restrictions aren’t unique to Canada. The United States, for example, has an export-licensing regime for trees cut on federal and state lands. What’s unusual about Canada’s regime is that it also covers trees on private land in B.C.

In Canada, roughly 90 per cent of timber available for cutting is on Crown land. But there are vast privately held forests, as well – in Atlantic Canada and throughout British Columbia. Only in B.C. are there limits on exports.

And now lumber companies across the country are paying dearly for alleged subsidies, whose benefits they don’t enjoy.

BC Liberal Leader Christy Clark rails against U.S. President Donald Trump for unfairly targeting the province’s lumber industry.


Frustrated companies in the rest of the country could just as easily point fingers at her and the federal government.

REUTERS. May 9, 2017. Oil steadies but rattled by concern about OPEC's clout
By Amanda Cooper

LONDON (Reuters) - Oil rose on Tuesday but faced headwinds from concern over slowing demand and the rise in U.S. crude output that has shaken investors' faith in the ability of OPEC to rebalance the market.

Brent crude futures were up 9 cents at $49.43 per barrel at 1110 GMT (7.10 a.m. ET), above a session low of $49.18, while U.S. West Texas Intermediate futures were up 11 cents at $46.54 per barrel.

Weekly U.S. data on crude production and inventories, plus monthly reports on supply and demand from the Organization of the Petroleum Exporting Countries and the U.S. Energy Information Administration this week, should provide a detailed picture of how quickly global crude inventories are falling.

"We really need to see some of the data starting to support the idea that global inventory levels are coming down," Saxo Bank senior manager Ole Hansen said.

"Almost as importantly, there have been some signs that there has been some wavering in terms of demand growth."

High U.S. gasoline stocks have fed some concern about demand in the United States, where consumer spending expectations hit a three-year low last month and vehicle sales have fallen year-on-year for four months in a row.

Coupled with that is faltering manufacturing activity and a drop in commodity imports in China, the world's second-largest economy and biggest raw materials consumer.

Even though OPEC has stuck to its pledge to cut production, U.S. output has risen by more than 10 percent since mid-2016 to 9.3 million barrels per day, close to the output of Russia and Saudi Arabia.

"U.S. oil production surpassed expectations in terms of an early bottoming and swift uptick, and is set to expand further based on the latest drilling momentum," said Norbert Ruecker, head of macro and commodity research at Julius Baer.

"We see prices between $45-50 per barrel as fundamentally justified. Consequently, we have raised our view to neutral from bearish and closed our short position. An extension of the supply deal beyond June looks likely but its effectiveness will remain questioned."

Bank of America Merrill Lynch said slowing demand was also suppressing oil prices.

"Oil demand growth this year is underwhelming, in part explaining why crude oil prices and refining margins have sold off sharply recently," it said.

On the physical markets, barrels of North Sea crude changed hands at their lowest levels since late 2015 on Monday.

Top exporter Saudi Arabia said on Monday it would "do whatever it takes" to rebalance a market that has been dogged by oversupply for over two years.


(Additional reporting by Henning Gloystein in Singapore; editing by Dale Hudson and Jason Neely)

SCOTIA BANK. ECONOMICS. ANALYSIS. May 8, 2017. Peru

FULL DOCUMENT: http://www.gbm.scotiabank.com/scpt/gbm/scotiaeconomics63/peru-execbriefing.pdf

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LGCJ.: