Currently trading at 68.5, the October contract continues to trade below 70 in European morning. The market awaits the US Energy Department's inventory report which will likely show a draw in crude stockpile.
Another focus will be OPEC's regular meeting which will be held on September 9. While it's widely anticipated the organization will keep production unchanged, we would like to see the OPEC's view on the demand/supply outlook.
Over the past few weeks, representatives from member countries have commented on oil price and productions. Chakib Khelil, Algerian oil minister, will call on members to comply more strictly with their assigned quotas. Countries that have been producing above their quotas, such as Iran, Angola, Ecuador and Venezuela, will be advised to comply with their production limits. Earlier last month, Kuwait said that quotas should remain unchanged as oil prices are 'not too good, not too bad'. Qatar also said last week that OPE should not change its production quota.
Stock markets drop today. In European morning, UK's FTSE 100 Index slides -0.2% to 4811. Germany's DAX and France's CAC 40 lose -0.45 and -0.6% respectively. In Asia, the MSCI Asia Pacific Index plunged -1.5% while Japan's Nikkei 225 Stock Average sank -2.4% to 10280. In Australia, the S&P/ASX 200 Index slipped -1.7% although Australia' GDP unexpectedly grew +0.6% qoq in 2Q09.
VIX, also known as the fear index, rose to 29.15 yesterday. This was the highest reading since July 9 and represented a +26% from the low made on July 24.In Europe, the VStoxx also surged to 31.54, the highest level since August 17. These readings signaled investors' tolerance of risk has been lowered.
Gold price continues to gyrate within recent range, bouncing up and down around 950 level. Platinum extends further weakness to 1209 following a -1.4% decline Tuesday. News said that some mines in South Africa resumed production as this eased concerns on supply disruption.
The US Department of Transportation announced that the cash for clunkers program, which ended August 31, took nearly 700K clunkers off the roads and replaced by more fuel efficient vehicles. According to the press released, 84% of consumers traded I trucks and 59% purchased passenger cars. While this is good for the environment as new vehicles are more fuel-efficient, some said it will result in a net increase in PGMs as the older cars, usually with heavy PGM content, can be recycled and will result in abundant supply of PGMs. However, the supply cannot be fully absorbed by new cars as they need less PGMs.