Oil price continues to trade with a soft tone below $45/bbl in European morning as investors were disappointed by the OEPC's decision given further deterioration in oil demand. However, many analysts were happy as rise in oil price will have negative impact on economy recovery.

According to Francisco Blanch, commodity analyst at Merrill Lynch, OPEC should focus on strict adherence to production quota before announced further reduction. Moreover, spike in oil price is not good for global economy.

OPEC's decision did not change our view that oil price has been stabilizing. Both WTI and Brent crude forwards have shown strengthening in timespreads, indicating OPEC's previous cuts have tightened oil market. Oil price has traded with great volatility since 2H08 and dived by more than 70%. However, the collapse appeared to have ended at 32/33 in Jan 09 and price has been staying roughly above 40 over the past few weeks.

If OPEC could achieve 100% compliance, 0.8M bpd more will be removed from the market. This, together with non-OPEC's decline in production should tighten market further. In February, oil production in Russia dropped 70K bpd yoy to 9.72M bpd.

The stock market rallied today as G-20 committed to revive economic growth as clean up the toxic assets in the financial system. In Asia, the MSCI Asia Pacific Index gained 2%, Japan's Nikkei 225 Stock Average added 1.8% and Hong Kong's Hang Seng Index climbed 3.6% as driven by gains in financial stocks and automakers. Airline shares also soared as OPEC refrained from cutting outputs.

In Europe, UK's FTSE 100 climbed for a 3rd day as Barclays said it has a strong start in 2009. The lender rose 14% in the morning. Germany's DAX Index rose 2% as led by Deutsche Bank;s 5% rally.

Gold price edges lower as the equity markets gain. Currently trading at 923.8, we expect buying interest for the precious metal will resume soon after consolidation as investors eventually realize there's no such 'risk-free' safe-haven as gold. In the past, investors tended to park their money in Swiss Franc during times of economic uncertainty. After the SNB's announcement of intervention last week, funds have been driven from Swiss Franc to other places.

The Bank of Japan will meet tomorrow and the market expects it will increase purchase of long-term government securities. Moreover, the FED policy makers will start a 2-day meeting tomorrow to discuss the economy. Economists anticipate more details to be released for the purchase of long term Treasury securities. The FED's policy has been inflationary as it reduced its target rate for overnight loans to 0-0.2% and more than doubled its balance sheet. We believe these actions would lead to weaker dollar and this would help gold's rally.