Market sentiment was lifted yesterday as investors welcomed German officials' comments on Spanish bailout and encouraging US economic data. The US dollar slipped on increase in risk appetite, thus sending the Euro and other risk assets higher. In the commodity sector, the November contract for WTI crude oil added +0.26% to settle at 92.09 while Brent crude contract slipped -0.6% to end the day at 115.07. The Brent crude contract expired yesterday. Gold price jumped from a 1-monht low as the greenback dropped and looming US inflationary pressure raised demand for the yellow metal.
Germany is getting more accommodative over providing bailouts to its European counterparts. Olli Rehn, the European Union's Economic and Monetary Affairs Commissioner, introduced in an interview a new instrument of the ESM- Enhanced Conditions Credit Line. Rehn stated that the new toolbox is a precautionary credit line facilitating "the kind of primary debt market interventions of Spanish government securities that we would have in mind in case there would be a request". Both Michael Meister and Norbert Barthle, senior lawmakers of German Chancellor Angela Merkel's Christian Democratic Party, stated that this "would be a possible move". This suggested the biggest Eurozone lender has turned softer towards the conditions of financial assistance to debtor countries.
US' economic data contained some pleasant surprises. Inflation surprisingly rose to +2.0% y/y in September from +1.7% in the prior month. The market had anticipated a more modest gain to +1.8% Core CPI climbed slightly higher to +2.0% from +1.9% in August. Industrial production rose +0.4% m/m in September, following a -1.2% drop in the prior month and consensus of +0.2% gain. The NAHB housing market index improved +1 point to 41 in October.
On oil inventory, the industry-sponsored API estimated that crude inventory rose +3.7 mmb in the week ended October 5. On fuels, gasoline inventory slipped -1.2 mmb while distillate added +1.8 mmb. The official data from the DOE/EIA probably report a +1.7 mmb increase in crude stock while declines in fuels with gasoline and distillate dropping -0.5 mmb and -1.2 mmb respectively.
Oil and Gold Reports contributed by Oil N' Gold