Oil price continues its 3rd day of retreat after briefly rebounded to 51.82. Currently trading at 49.8, the black gold's weakness is brought about by anticiaptation of another week of uptick in US inventory as well as decline in stock markets.
According to Bloomberg survey, crude stockpile probably gained 1.25 mmb for the week ended Apr 3 to 360.65 as demand remained sluggish. Gasolline stockpile is expected to have drawn 1.5 mmb while that for distillate might have dropped 0.35 mmb. Although market sentiment has turned constructive after G-20 Summit and oil price has rallied together with equities, the rise will not be sustainable unless inventory comes down.
Stock markets reversed ground amid concerns that corprations will report poor earnings for the first quarter of 2009. In Asia, the MSCI Asia Pacific Index slid 0.2% with Japan's Nikkei 225 Stock Average plunged 0.28%, Australia's S&P/ASX 200 Index dropped 1.3% and Hong Kong's Hang Seng Index closed 0.46% lower. The RBA unexpectedly slashed its policy rate by 25 bps to 3% today as the central bank sees downward revision in economic outlook.
In European morning, UK's FTSE 100 Index plunged 1.7% as industrial production slid -1% mom and -12.5% yoy in February. Moreover, Germany's DAX Index and France's CAC 40 plummeted 1.16% and 1.6% respectively.
Gold price recovers to 878 after plunging to 865 Monday. Last week, the precious metal dived as risk appetite increased and the proposed gold sales from IMF feared the market. As we have metioned before, the proposal was not a new one and although sales of the 403.3 mmb will cause gold price to decline by more than 10% in the coming few years. However, strong investment demand and purchase of gold from central banks should be able to offset the weakness. Moreover, global interest rates will stay low for a considerably long period which is also supportive for gold price.