Crude oil price retreats below 80 in Asia Monday as investors take profit-taking after the 4-week rally. Price level above 80 doesn't seem to be justified as energy demand remains at low level despite recovery. Moreover, ceasefire in Nigeria eases concerns on supply disruption.

Currently trading at 79.7, the benchmark contract should continue trading narrowly as there's not much data release today.

The Movement for the Emancipation of the Niger Delta (MEND) announced an 'indefinite ceasefire' and started to talk with the government for the end of the conflict. Nigeria has oil reserves of about 36B barrels and gas reserve of 187 trillion cubic feet. It's the biggest oil producer in Africa and the 5th largest oil supplier to the US. Since 2006, the MEND has, through its attack to the country's oil facilities, reduced Nigeria's output by over 20%.

According to the email from the militant, the ceasefire aims to 'encourage the process of dialogue between the government and the team, MEND has selected to negotiate its demand for a lasting peace'.

Data release from China continued to show robustness in its economic growth. Although crude oil imports in September declined for the second month to 17.2 metric tons, it was +15% higher than the same period last year and remained at historical high level.

Trading at 1056, Comex gold price changes little in Asia as the dollar index recovers for the third day. The yellow metal will continue to consolidate for sometime before recent uptrend resumes.

Commitments of Traders

  • Crude Oil: Net speculative long positions surged for the third week to 74383 contracts, the highest level since the first week in January, 2009, as oil price broke above the trading range of 65-75. There's risk of correction in oil price in the coming week as investors take profits on recent rally.
  • Natural Gas: Net shorts rose to -150K contracts. Recent strength in gas price has lost steam and further increase in net shorts cannot be ruled out in coming weeks.
  • Gold: Net speculative long positions slid modestly after reaching a record high in the previous week. Open interest in gold futures has surged more than 30% in a month, compared with single-digit increase in other commodities, including crude oil. We believe consolidation in gold should continue to some more time as investors take profits from long trades.
  • Silver: Net speculative long positions retreated in tandem with gold. Similar to gold, silver is prone to a correction before resuming the uptrend
  • Platinum: Net long positions dropped to 19.2K contracts. Fundamental outlook on platinum is better than gold and we believe this will drive investment demand too

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