Crude oil price plunged 4.2% to close at 50.05 (intraday low at 48.84) Monday as the International Energy Agency sharply revised down its 2009 oil demand forecast by 1M bpd(from previous projection) last Friday. Stock markets' opening in negative territory also dragged down oil price. In Asian morning, the black gold extends the weakness yesterday and is currently trading at 49.6.
IEA anticipated that oil consumption may contract 2.4M bpd to 83.4M bpd, the lowest level in 5 year, in 2009 as global economic outlook remains sluggish and auto sales slumped (IEA also revised down global GDP growth to -1.4% from +0.5%). Geographically, OECD demand was reduced by 760K bpd while that for developing countries was down for the first time since 1993 by 230K bpd.
On the supply side, IEA expected non-OPEC supplies to drop 360K bpd of which 220K bpd will be outside Brazil and the US. Moreover, the report forecast over 1M bpd in investment cancellations or delays.
Gold briefly regained 900 level but then faltered to close at 895.8, +1.4%, yesterday as the dollar retreated. The dollar index plummeted 1% to 84.6 yesterday. Against the euro, the greenback also slid 1.5% to 1.337.
According to UBS, gold price could rise to 2500 in the next 5 years as 'the prospects for deflation or inflation are becoming more extreme' and the bank suggested investors to overweigh gold as there are 'broad uncertainties in the current macro climate'.
Concerning stock markets, investors' focus has turned to 1Q09 corporate earnings. Dow Jones Industrial Average opened lower at 8082 but then recovered after Goldman Sachs released better-than-expected quarterly results and announced a $5B stock offering. While DJIA ended the day with 0.32% drop, S&P 500 gained 0.25%. In Europe, UK's FTSE 100 added 1.5% while Germany's DAX climbed 3%.
In Asian morning, performance is mixed with Japan's Nikkei dropped 1.3% as driven by declines in auto shares. However, Hong Kong's Hang Seng Index rose almost 3% to 3-month high amid speculations that economic data from China will reassure economic recovery.