WTI crude slipped in European session despite reports that some producers in Gulf of Mexico have cut output due to Tropical Storm Don. Investors paid little attention to the potential disruption as the main focus is on US and European debt problems. Market sentiment remained weak. Worse-than-expected economic data added to worries over a global economic slowdown.

The National Hurricane Center said Tropical Storm Don strengthened slightly before making landfall on the Texas coast today. Companies such as Enbridge, BP and Northern Natural Gas said that they have evacuated staff working near the area. Don's arrival has resulted in the shutdown of about 6.8% of oil and 2.8% of gas production in the Gulf. Yet it's unlikely that the storm will turn into a hurricane. The National Hurricane Center believed that Don will only have limited impacts on oil and gas production in the Gulf.

Eurozone's CPI estimate surprisingly eased to +2.5% y/y in July after staying at +2.7% over the past 2 months. The reading is the lowest since February this year. The ECB has pledged to exercise strong vigilance on price pressure. The moderation in July should allow the central bank to leave interest rates unchanged comfortably. Earlier in the day, Japan released a set of economic indicators. Core CPI eased to +0.4%y/y in June from +0.6% a month ago. The slowdown was more than the market had anticipated. The leading inflation indicator, Tokyo core CPI, however, climbed to +0.4% y/y in July from +0.1% in June. Household spending contracted -4.2% y/y in June, accelerating from -1.9% in May and exceeding consensus of a -2.3% drop. Japanese consumers remained cautious in the country's outlook after the earthquake. The employment condition remained dismal with the jobless rate rising to 4.6% in June from 4.5% in the prior month. Moreover, industrial production rose +3.9% m/m in June. This was below consensus of +4.5% and May's +6.2%.

US' GDP report will probably show that economic growth slowed to +1.7% (annualized) in 2Q11 from +1.9% in the prior quarter. San Francisco's Fed President John C. Williams said if 'the recovery stalls and inflation remains low or deflationary pressures reemerge', the central bank may need to keep interest rates low for a longer period of time or even 'increase stimulus'. Separately, The Chicago PMI probably slipped -1.1 points to 60 in July while the final estimate of University of Michigan Confidence data may be revised higher, by -0.2 points, to 64 in July.