Concerns over the sovereign debt crisis in the Eurozone remerged with Spanish and Italian bond yields soaring. Major European bourses plunged 2-3% while Wall Street also dropped with the DJIA and the S&P500 Indices losing -1.65% and -1.70% respectively. In the commodity sector, crude oil prices were also affected by contagion worries of Eurozone's debt problems. Added to the concerns was the DOE/EIA's downward revision on oil demand for 2012 and 2013. Gold, however, firmed amid increases in safe-haven demand.

Although the Spanish government announced an additional 10B euro austerity package yesterday, investors remained doubtful on whether it will get approval and whether it can be implemented smoothed. Moreover importantly, it's uncertain whether the measures are sufficient for the country to reduce its debts to an acceptable level. Yields of 10-year Spanish bond rose to a 1-year high of around 6.0%. Concerns have also spread to Italian, sending the country's yield to as much as 5.7%. This would inevitably affect Italian bond auction today. On the dataflow, the house sales in Spain declined -31.8% y/y in February. The housing price has also dropped -20% since late 2007. Further deterioration in the housing market would hurt the banking system further.

In the oil sector, the DOE/EIA forecast that global oil demand will increase to 88.81M bpd in 2012, up +1.01% from a year ago. This is a reduction from March's projection of 88.96M bpd. Also, the agency expected demand in 2013 will rise further to 99.11M bpd but this is also a drop from March's estimate of 90.33M bpd. Tensions over Iran's nuclear development continue. Ahead of the resumption of talks between the Middle East country and the West, President Mahmoud Ahmadinejad stated that oil sanction would not affect the country's economy as there is so much funds available that 'even if we don't sell for two, three years the country will still be managed easily'.

The industry-sponsored API reported that US crude oil inventory jumped +6.58 mmb in the week ended April 6. Gasoline stock rose +1.2 mmb while that for distillate dropped -.48 mmb. The market has anticipated that the official US report would should a +1.8 mmb increase in crude stockpile, a dip of -1.25 mmb in gasoline stock and a +0.20 mmb in distillate.