Crude oil price extends weakness for the 5th day although macroeconomic development seems to have improved. Price plunged to a 1-week low at 83.43 in early trading session but managed to recover modestly after successful bond auction in Greece. Oil price is expected to trade within a narrow range today as the market awaits the weekly inventory report.

According to International Energy Agency (IEA), global oil demand will increase +2% y/y to 86.6M bpd in 2010. This represented an upward revision of +0.03M bpd from March's projection, driven by stronger recovery in US and Asian demand. On the supply side of the equation, non-OEPC supply will rise modestly to 52M bpd, compared with 51.8M bpd estimated a month ago. Such increase, together with OPEC NGL production, will lower the 'Call on OPEC' to 28.8M bpd from March's forecast of 29.3M bpd.

The IEA said that OPEC's compliance to production limit continued to fall in March. The 11 members subject to quota produced 26.7M bpd during the month, translating in compliance level of 55%, -1% lower than 56% in February.

Market sentiment has turned better as concerns over default in Greece have reduced. VIX, the commonly-known 'fear index', fell to 15.58, the lowest level since July 20007, yesterday. However, stocks, commodities and 'growth' currencies did not perform (i.e. rally) as anticipated. One explanation is investors choose to wait and see ahead of 1Q10 earnings season which begins next week.

Gold and silver decline for the second day as the euro weakens. In Greece, the Treasury sold 780M euro of 26-week bills at a yield of 4.55% and 780M euro of 52-week securities to yield of 4.85%. Both issuances were well-received, attracting bids for 7.67 times and 6.54 times the amount offered respectively. Initially, investors treated the result as encouraging. However, they immediately realized that strong buying was due to high yield and the 'virtually riskless' nature of the offer -that is the market expects Greece will so activate the package offered by the EU.

In tandem with other commodities, PGMs also drop with platinum and palladium losing -1.2% and -1.7% respectively. However, the pullbacks do not change strong price outlooks. China, the biggest auto market, recorded +76% increase in car sales to 3.5M units in 1Q10. While the growth rate will slow later in the year, expansion will remain robust. Strong auto market should increase demand for PGMs which are used as autocatalytic converters.