Crude oil price moved without direction Thursday. After rallying to as high as 82, the benchmark contract pierced below 80 briefly and then rose again to settle at 81.19, -0.2%. Others in the energy market also retreated with both heating oil and gasoline losing 0.5% to 2.095 and 2.054 respectively. Energy prices traded with high volatility as potential increase in supply from OPEC has slightly damped investors' interest in crude while the bearish outlook on USD spurred demand for commodities.
In light of recent vigorous rally in oil price, the OPEC reminded the market that its ideal price level is 75-80. According to Secretary-General Abdalla El-Badri, the cartel may increase production 'if this price will continue, if we see stocks go back to the normal level, if we see there is a real economic growth'. A survey showed that OPEC will increase shipments by +0.4% to 22.69M bpd in the 4 weeks to November 7.
Stock market advanced in the US as robust earnings results overshadowed disappointing jobless claims data. Dow Jones Industrial Average gained +1.3% to 10081 while S&P 500 Index added +1.1% to 1093. Today in Asia, the MSCI Asia Pacific Index rose +0.8% as driven by better-than-expected earnings from Kia Motors (Korea) and Wesfarmers (Australia).
Gold continued its narrow trading and was heavily influenced by USD's movement. Comex gold initially fell to as low as 1052 amid the dollar's recovery. However, as the rally lost steam, gold rebounded and closed at 1058.6. The strong growth in China should have impact of gold, though in what direction is uncertain. The Chinese government raised concerns about inflation. If the government reduces stimulus measures, this will slow down the growth momentum thus weigh on gold. If the robustness in Chinese economy suggests higher demand for commodity, this would be positive for gold.
While also range-bounded, silver trading was more volatile. The benchmark contract dropped -1.5% to close at 17.55. Despite the deeper decline compared with gold, silver continues to outperform gold with its +54% rally year-to-date.
On the macro- front, UK's GDP is today's focus. Consensus forecast UK's economy expanded +0.2% qoq in 3Q09. On annual basis, the contraction probably moderated to -4.6% from -5.5% in the prior quarter. In the third quarter, improvements were seen in consumer confidence, housing prices and retail sales. However, industrial production disappointed the market in August by dropping -2.5% mom. Manufacturing production also slid -1.9% mom, the lowest level since 1992. This shook investors' optimism on recovery in the nation.