Crude oil recovers modestly in European morning. Rise in Asian stock markets and strong sentiment index in Germany boost price. Currently trading at 72.2, the benchmark contract will continue its narrow trading ahead of oil inventory report.
Germany's IFO business climate index rose to 90.5 in August, compared with market expectation of 89.1, from 87.3 in the prior month. Leading the surprisingly strong number was a +4.6 point increase in the 'expectations' component. The 'current conditions' component also gained +1.8 points during the month.
In Asia, stocks advanced as several Chinese companies' reported better-than-expected earnings results. The MSCI Asia Pacific Index surged to the highest level since August 14 while Nikkei 225 Stock Average added +1.4% to 10640. In China, the Shanghai Composite Index added +18% while Hong Kong's Hang Seng Index edged +0.15 higher. CNOOC (0883.HK) reported a -55% yoy decline of net profit in 1H09 to RMB 12.4B, better than market expectation of RMB 11.5B as helped by rebounds in crude oil price.
Apart from the inventory report, oil price will also be affected US durable goods orders and new home sales data. The market forecast durable goods orders increased +3.3% in July after falling -2.55 a month ago. Driving the rise was strong growth in the transportation sector. Orders for non-defense aircraft and motor vehicles soared during the month. New home sales probably climbed to 390K units in July from 384K units in the prior month.
While continues climbing higher, gold price stays within a narrow range of 930-960. The yellow metal rose to as high as 956.3 Monday in concern with rally in crude oil. However, selloff in crude oil later in the session triggered profit-taking in gold.
The CFTC is going to adopt measures to curb excessive speculations in energy. Stricter positions limits in futures trading will likely cause liquidations in oil and other energy futures. We believe the situation will affect other commodities including gold.
Platinum price has little change at 1248 although there's a strike at a Rustenburg mine operated by Impala. While the market anticipates the strike will not have much impact on overall platinum production, rise in stockpiles in Switzerland probably will affect the demand/supply balance in platinum market.
According to UBS, platinum stockpiles in Switzerland rose by 464K oz in the 3 months through July. According to John Reade, this is 'challenging our view that this market will be more or less in balance this year ... the issue appears to be driven by a lack of demand for platinum - with the exception of China, where imports and turnover on the Shanghai Gold Exchange remain strong - because the increase has been driven by larger Swiss imports than smaller exports.'