Strong trading momentum remains in European morning, and crude oil for September rallies to as high as 70.95. China PMI boosted sentiment in Asia and the momentum has been extended further after better-than-expected readings from the Eurozone and UK's PMIs. Stock markets also continue the strength.
Final manufacturing PMI in the 16-nation regions was revised up to 46.3 in July while the reading or Germany also edged higher to 45.7 during the month. In UK, PMI surpassed the 50 level to 50.8 in July, signaling the first expansion in the manufacturing sector since March 2008.
The equity market goes higher in European morning. UK's FTSE 100 Index rises +1.6% to 4683 while Germany's DAX and France's CAC 40 gains +1.7% and +1.5% to 5421 and 3478, respectively.
News reported that OPEC increased oil production for a 4th month in July, rising by 45K bpd to an average of 28.39M bpd last month. In total, the 11 OPEC members with quotas produced 26.05M bpd during the month, +1.19M bpd more than the target. With oil price surging rapidly, we believe most cartel members are tempted to export more oil. The situation may persist this month. OPEC will not announce any policy change at the general meeting in September. In fact, it's unlikely to have any tightening in oil output unless oil price drops to around 50/bbl.
Although time spread in Brent crude oil price improved last, time spread in WTI crude oil worsened, suggesting the need to pull oil out of storage. Other than global oil fundamentals, WTI spread reflects local logistics and the current trend indicates increase in Canadian crude oil is being pushed into Cushing Oklahoma.
Gold price soars to 6-month high at 966.9 before pulling back to 962 amid USD's weakness. Others in the precious metal complex push high with silver rallying +2.8%, after a +3.3% rise Friday, to 14.33. The dollar index continues to head south after plunging to year-to-date low last week. Against euro, the greenback sinks for the 3rd day and attempts to test 1.434 low made to June 3. The yellow metal's outlook will be determined by USD and the broad market sentiment this week.