As expected, OPEC decided to keep production unchanged again at the meeting today. The decision was made based on the organization's expectation that global oil demand will recover towards the end of the year and more compliance on previous quotas is needed before further output reduction should be announced. According to Saudi's oil minister, 'market is in good shape' and 'prices are good'.

In April, OPEC-11 (excluding Iraq) pumped 25.81M bpd, representing 77% compliance of the agreed target of 24.845M bpd. April's production was actually higher than that in March, suggesting the cartel members need to adhere more strictly to their assigned production targets.

Crude oil price resumes recent strength after brief consolidation. The benchmark futures (July) rises to 63.55 in European morning as OPEC's decision has been widely anticipated. The focus now has shifted to the inventory report in US session. The majority of analysts forecast crude inventory dropped 1 mmb last week.

In Europe, stock markets open lower despite improved consumer confidence. UK's FTSE 100 Index lost 1.2% to 4363 in European morning while Germany's DAX and France's CAC 40 slid more than 1% as the market worry that potential increase in borrowing cost may affect corporate earnings.

Eurozone's consumer confidence rose to 69.3 in May from 67.2 a month ago. This is the highest level in 6 months and suggested the market's sentiment toward recovery has turned more optimistic. Moreover, Germany's unemployment rate surprisingly declined to 8.2% in May from 8.3% in the previous month.

Gold price continues to trade with a mildly soft tone as success in US Treasury auction of 5-year notes yesterday relieved some of the investors' worries about USD's status. Last week, S&P's downgrade on UK's outlook raised concerns about the US prospect and triggered selloff in USD and pushed up gold price. However, after Moody's affirmed US' top rating on May 27, concerns were eased and gold dropped.

Despite Moody's affirmation, economists are still pessimistic about the fiscal position in the US. John Taylor, author of Taylor Rule, forecast that US debt levels as a% of GDP would surge to100% in 5 years from 41% at the end of 2008. Should that be the case, US may not be capable of retaining its S&P AAA rating.

IMF said that the Congress may soon approve the sales of 403.3 metric of gold holdings. However, we do not think this would trigger much price action as it has been factored in price in the previous month.

Platinum price plunges to 1130.6, the lowest level in a week, as driven uncertainty in US auto sector. General Motors, on the verge of going bankrupt, demanded an extra $415M from the Germany Government in order to keep Opel running. Involved parties felt discontented about the request and the auto giant did not present the full picture in the very beginning. Last week, Johnson Matthey forecast platinum's supply and demand will be closely matched in 2009, a better outlook than previously expected. However, we believe for platinum price to sustain another rally, successfully launch of platinum ETFs in the US is needed given the gloomy industrial demand.