Crude oil strengthened as the US ISM manufacturing index beat market expectations. The front-month contract for WTI crude oil prices soared to 106.43 , the highest level since March 28 before settling at 106.16, up +1.23%. Manufacturing activities in other countries were not as strong with the UK index falling while China's data climbed less than expected. The RBA unexpectedly cut interest rates by -50 bps to 3.75%. This had weakened the Australian dollar but did not have much impact on commodity prices.

The US ISM manufacturing index rose +1.4 points to 54.8 in April. This was higher than consensus of 53. Elsewhere, the UK PMI manufacturing index unexpectedly fell to 50.5 in April, compared with market expectations of 53. In China, the official manufacturing PMI rose to 53.3 in April but was below forecast of 53.6. The data compiled by HSBC showed a reading of 49.3 (revised up from the preliminary reading of 49.1), indicating the sector remained in contraction.

Concerning the US oil inventory, the industry-API estimated a +2.04 mmb increase in crude stockpile in the week ended April 27. Gasoline stock fell -3.90 mmb while distillate dropped -4.20 mmb during the week. The DOE/EIA report probably showed that crude inventory rose +2.0 mmb while gasoline and distillate slipped -0.8 mmb and -0.2 mmb respectively.

Weekly change in inventory as of 27/04/11 ChangeConsensusPrevious
Crude oil  +2.00 mmb+3.98 mmb
Gasoline  -0.80 mmb-2.24 mmb
Distillate  -0.20 mmb-3.05 mmb

Comparison between API and EIA reports:

       

  API (Apr 27)   EIA (Apr 20) 
 ActualInventoryPrevious Forecast (using API's inventory level)Inventory
Crude oil+2.04 mmb370.39 mmb-0.99 mmb -2.63 mmb370mmb
Gasoline-3.90 mmb212.87 mmb-3.64 mmb +1.14 mmb213 mmb
Distillate-4.20 mmb124.55mmb-3.56 mmb -1.37 mmb125 mmb