Crude oil rose to 1-month high at 79.12 before closing at 78.77, up +0.9%, Monday. The 4-day rally is the longest winning streak for the black gold since October. Robust retail sales during holidays, anticipated strong economic growth in China and re-emerged tension in Iran spurred speculations that energy demand should go higher. The benchmark contract slides in Asian session as USD climbs.
According to MasterCard's SpendingPulse, retail sales jumped +3.6% yoy during the holiday season (November 1-December 24), partly because improved economic conditions spurred spending partly because there was 1 more day between the November 26 Thanksgiving Day and Christmas Eve. Stripping out the extra day, the growth would be +1%. The growth is an optimistic sign that retailers' revenues in the fourth quarter may beat market expectation. Oil price was boosted by the news as investors treated it as an evidence of economic recovery, a sign that we are out of woods.
In China, the National Statistics Bureau reported that Chinese industrial companies' net income surged +7.8% yoy to a record high of RMB2.59 trillion in the first 11 months in 2009. Moreover, Premier Wen Jiabao's comment that the government will maintain a 'proactive' fiscal stance and 'moderately loose' monetary policy suggests the growth will continue and accelerate as economic recovery in other parts of the world picks up. China is the world's second largest oil consumer. In the first 11 months in 2009, crude oil imports surged +11% yoy to 182.52M metric tons.
A crackdown by Iranian forces on protesters in Tehran and the US' government's sanctions on Iran amid suspicion of the country's development of nuclear weapon have increased tensions between Iran and the advanced economies. Iran is the world's second largest oil producer, supply shortage can be a problem if it threatens to reduce oil exports.
After soaring to 1114.5, the February contract for gold reversed and closed at 1107.9. USD's strength after strong retail sales data weighed on commodities. Currently trading at 1105, the yellow metal should move sideways with a soft tone ahead of US market opening.
US consumer confidence probably improved to 53 in December from 49.5 in the previous month. However, further data points are needed to see if the upward trend can sustain. S&P/Case-Shiller home price is expected to have climbed +0.4% in October, thereby narrowing the annual decline to -7.3%, from -9.4% in September.