Commodity prices held up well earlier in the week but then weakened towards the end. Several factors, including the ease in economic data and talks of an imminent SPR release, and the tug of war between renewed sovereign debt crisis in the Eurozone and speculations of firewall expansion, were the main causes of the price actions. Over the past week, investors were disappointed by the slides in the preliminary PMIs in China and Europe, as well as some of the regional surveys in the US. Strength in oil prices over the past months was driven by worries over supply disruption as the US sanctions against Iran tightened. However, the concerns were readily eased after France indicated SPR release would come soon. In the Eurozone, concerns over the sovereign crisis in the Eurozone re-emerged as uncertainties were seen in Spain, Greece and Ireland. Yet, expectations that EU finance ministers would expand the firewall for future bailouts lifted sentiment somehow.

The front-month contract for WTI crude oil plunged -3.60% to 103.02 during the week while the equivalent Brent crude contract lost -1.80%. Yet both contract managed to record gains for a second consecutive quarter. Crude oil prices slumped sine the middle of the week as talks of SPR release intensified. French Prime Minister Francois Fillon stated that prospects are 'good' for a US-Europe agreement on a release from strategic reserves while the White House attempted to downplay the plan by stating only that the option 'remains on the table'. Yet, as talks of a release have been intensified, it appeared that policymakers are pressured to do something regarding this. However, we doubt if oil prices would be further affected should policymakers announce a release as recent decline in prices has almost reflected the increase in oil supplies. We believe that unless there is a huge surprise the amount of quantity released, further sustainable lower oil prices would be difficult to achieve.

The DOE/EIA reported that gas inventory increased +57 bcf to 2 437 bcf in the week ended March 123. Stocks were +816 bcf above the same period last year and +900 bcf, or +58.6%, above the 5-year average of 1 537 bcf. Separately, Baker Hughes reported that the number of gas rigs added +6 units to 658 in the week ended March 29. Oil rigs rose +5 units to 1 318 and miscellaneous rigs stayed unchanged at 3 unitd, sending the total number of rigs to 1 979 units. Directionally oriented combined oil, gas, and miscellaneous rigs climbed +2 units to 233 while horizontal rigs increased -6 units to 1 180 and vertical rigs gained +3 units to 566 during the week.

The precious metal complex was pressured during the week. Although gold, silver the platinum recorded weekly gains, their outlooks are uncertain and downsides risks remained. Palladium has indeed plummeted to the lowest level since January. Concerns over demand, in particular a potential slowdown in China, were key factors affecting prices of silver and PGMs. Gold's movement has been highly affected by expectations of QE3. The yellow metal got dumped over the past weeks as hopes of QE3 dissipated. Yet, the situation appeared to have changed a bit towards the end of last week as the Fed chairman Ben Bernanke signaled further easing is needed give further boost to the job market. His comments have driven some analysts to anticipate further accommodative measures to be announced in as soon as April.