Risk appetite appeared to have improved modestly after unverified news said that Libya's leader Muammar Gaddafi might have been shot. Wall Street trimmed losses with DJIA and S&P 500 slipping -0.31% and -0.1% respectively. (The stock markets rebounded in Asian session today.) Oil prices reversed the gains made earlier in the day as Saudi Arabia, the US and the IEA assured that they would release emergency oil stockpiles when needed. The front-month contract for WTI crude oil initially surged to a 29-monht high of 103.41 before settling at 97.28, down -0.84%. Corresponding Brent crude oil futures closed flat at 111.36, following a rally to as high as 119.79. Gold prices managed to crawl higher with the benchmark Comex contract ending the day at 1415.8, up +0.13%.

In light of disruption of oil output in Libya and surges in oil prices, Saudi Arabia pledged it and other OPEC members would replace and loss in Libyan oil when needed. In a statement released by the IEA governing board, the agency estimated that the unrest in Libya has reduced crude oil supply by 0.5-0.75M bpd, or less than 1% of global oil consumption. The IEA said it's always ready to immediately activate its existing collective response mechanism when deemed necessary. The IEA members have 1.6 mmb of emergency oil stocks at their disposal, or in aggregate 145 days of import cover for IEA members.

Geopolitical tensions in the MENA region and inflationary concerns driven by the rally in oil prices have supported gold prices over the past 2 weeks. Should the tensions ease, leading to improvement in market sentiment, gold and others in the precious metal complex may suffer.

In the currency market, Japanese yen and Swiss franc received strong demand as safe-haven assets. However, the US dollar failed to benefit as macroeconomic data were mixed. Initially jobless claims fell -22K to 391 in the week ended February 19, taking the 4-week average down to 402K. Continuing claims slid -145K to 3790K. The drop in initial payrolls during the week almost offset the gains in the prior week, managing to restore confidence that the recovery in the job market, though gradual, remains in progress. The focus is now shifted to the February employment report due next Friday. Durable goods orders jumped +2.7% m/m in January after contracting over the past 3 months. Gains were mainly driven by civilian aircraft orders while other items remained weak. Excluding transportations, orders contracted -3.6%, more than offsetting the +3% gain in December. Meanwhile, the -6.9% decline in core capex orders was disappointing.

The focus of today is on US' GDP for 4Q10 which probably rose by an annualized +3.3%, up from preliminary estimate of +3.2%. The University of Michigan Index is expected to have revised higher to 75.4 in February from 75.1 in flash reading.