Oil and Gold Reports contributed by Oil N' Gold

Financial market rose yesterday on encouraging US data, rumors of a delay to the implementation of Basel III and IMF Director Lagarde’s comments on the Eurozone debt crisis. Yet, gains were modest as sentiment was damped by some bad news such as S&P’s downgrade of Spanish credit rating and Lagarde’s call for EU member countries and central banks to take a haircut on their Greek debt holdings. In the commodity sector, oil prices soared as Turkey-Syria tensions intensified with a Syrian passenger plane forced to land in Turkey as it was allegedly carrying Russian munitions for the Assad regime. The US oil inventory data was mixed with rise in crude stockpile bit sharp fall in distillate.

At the IMF meeting in Tokyo, the Eurozone sovereign crisis was again under the spotlight. Director Lagarde suggested that debt-ridden countries such as Greece and Spain should be given more time (e.g.: 2 years) to resolve their fiscal deficit problem as recovery would be hurt if the austerity measures were too harsh. While this might serve as good news for debt-ridden countries, creditors, especially the biggest one, Germany, were dissatisfied. German Finance Minister Wolfgang Schaeuble stated that “the IMF has time and again said that high public debt poses a problem… So when there is a certain medium-term goal, it doesn't build confidence when one starts by going in a different direction…When you want to climb a big mountain and you start climbing down then the mountain will get even higher”. Meanwhile, Lagarde also called for creditors to give haircuts on debts loaned to Greece so as to close the gap more easily. Regarding this, Schaeuble said that, should this be really carried out, “the preconditions for further guarantees or payments would be destroyed”.

Staying in Europe, the EU said to consider delaying Base III, rules regulating bank regulation, for a year. This is positive for bank as they have more time to solve their capital problems. Yet, this was denied Karas, a lawmaker in the EU Parliament, who said that “a change of the dates of entry-into-force of the new capital requirements for European banks has never been discussed”.

On the dataflow, US’ initial jobless claims fall -30K to 339K in the week ended October 6. This was the largest weekly drop in jobless claims since July 21.The 4-week moving average also slipped -8K to 3279K, the lowest level since May while continuing claims fell -15K to 3273K in the week ended September 29.

The DOE/EIA reported that total crude oil and petroleum products stocks slipped -4.37 mmb to 1097.07 mmb in the week ended October 5. Crude stockpile increased +1.67 mmb to 366.37 mmb as stockpiles rose in 3 out of 5 PADDs. Cushing stock added +0.30 mmb to 44.17 mmb. Utilization rate was down -1.5% to 86.7%.

Gasoline inventory dipped -0.53 mmb to 195.41 mmb as demand dropped -0.53% to 8.59M bpd. Production slipped -5.15% to 8.64M bpd while imports slipped -12.39% to 0.50M bpd. Distillate inventory slid -3.18 mmb to 120.88 mmb although demand fell -6.60% to 3.82M bpd. Imports soared +96.55% to 0.11M bpd while production dropped -5.51% to 4.34M bpd during the week.