The US markets reopened after 2 days’ closure. However, investors’ sentiment was lukewarm as the focus was on the impacts of Hurricane Sandy on the economy. It’s expected that the clean-up bill would be huge and so far, around 6 million homes and businesses remain without power. Flights and subway in affected areas only resumed limited services. As the economic wellbeing would be affected negatively, the Fed would likely extend QE3, leading to the drop in the US dollar. In the commodity sector, crude oil prices rose as most refineries resumed operation. However, Phillips 66 Bayway, a major New Jersey refinery, remained shut down although power was back, leading also to a surge in gasoline prices.

Economic data released in the US was disappointing. Chicago PMI climbed +0.2 point to 49.9 in October but was far below market expectation of 51.4. The production index slipped -3.6 points to 51.8 while the employment index dropped -1.7 points to 50.3, the lowest level since December 2009. In the job market, ADP revised lower its payroll date using a new methodology. The monthly job addition was reduced to 88.2K in September, down from the 162K originally estimated.

In China, manufacturing PMI rose to 50.2 in October from 49.8 a month ago. While this was below consensus of 50.3, a reading above 50 signaled the manufacturing sector returned to the expansionary territory. The HSBC PMI data also showed improvement with the October data rising to 49.5 from 47.9 in September. HSBC said in its report that “October's final PMI rose to an eight-month high, implying that China's industrial activity continues to bottom out following a modest pick-up last month”.

Concerning oil inventory, the industry-sponsored API estimated that crude inventory gained +2.1 mmb to 371.72 mmb in the week ended October 26. For fuels, gasoline inventory fell -0.17 mmb to 199.17 mmb while distillate fell -3.50 mmb to 118.18 mmb. Hopefully, the Doe/EIA would release its official data on Thursday after delays due to the hurricane. The market anticipated that curde inventory probably slipped -1.75 mmb while gasoline and distillate stocks dropped -0.5 mmb and -1.4 mmb respectively.

Oil and Gold Reports contributed by Oil N' Gold