Crude oil price continues to trade sideways around 80 level in European morning. Although bulls may try to push higher with the help of strong stock market and weak USD, product demand outlook remains the major overhang on the energy market.

While global economic data suggest that the worst of recession is behind us and economic activities in OECD countries have been picking up, the focus for growth remains in emerging markets, especially China.

The Chinese Customs confirmed strong imports in September. Crude oil imports rose +15% yoy to 17.2 metric tons. In fact, China's demand for crude oil has recovered rapidly from global economic recession with annual growth seen again since April 2009. While the market has been thrilled by the robustness in China imports, it should be noted that growth has been seen only from crude oil. For diesel, china has become a net exporter since last 2008.

As economy improves, refiners have expanded their activities and total refinery capacities have been increased to 8M bpd in September from around 6M bpd since the beginning of the year. This allowed China to produce much more diesel that the country actually needs. We worry this will exacerbate the inventory situation in world distillate.

Stock markets in Asia extend Friday's rally amid strong economic data and corporate earnings results. The MSCI Asia Pacific Index added +0.5% while Japan's Nikkei 225 Stock Average gained +0.8% to 10363.Toyota Industry reported (preliminary) a net income of 200M yen from March to September, compared with consensus of a loss of 9.5B yen. After strong GDP growth in China, South Korea reported economic expansion of +2.9% qoq in 3Q09. The reading did not only beat market expectations of +1.9% but also signaled the fastest growth since 2002.

In Europe, the benchmark indices edge high in morning session. UK's FTSE 100 Index adds +0.4% to 5263 as driven by mining and metal companies. In Germany, DAX index climbs +0.8% to 5785 as driven by rally in Volkswagen.

Gold stays below 1060 although USD plunges again. Despite this, price movement for gold will continue to be determined by the dollar. As we believe that USD will weaken further at least towards the end of the year, gold's bullishness remains.

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