Crude oil prices had a choppy week, falling on the first few days and then rebounding in the middle of the week before experiencing selloff again after positive US employment data. The past week was marked by some central bank meetings and minutes with the Spanish debt request remaining uncertain. Friday’s payroll data in the US was a pleasant surprise. However, the market excitement was short-lived as investors were unwilling to carry their positions through the weekend.

The RBA on Tuesday lowered the cash rate by -25 bps to 3.25%. This was a surprising move as the majority of economists anticipated a rate cut in November. The decision revealed the policymakers were more worried about the global and domestic economic developments than before. The ECB let the main refinancing rate unchanged at 0.75%. The accompanying statement unveiled that there was no discussion about rate cut, probably driven by rising concerns over the inflationary outlook. The ECB believed that the September HICP (rising to +2.7% y/y from +2.6% in August) was 'higher than expected' and was the result of 'past increases in indirect taxes and euro-denominated energy prices'. It also anticipated that 'on the basis of current futures prices for oil', inflation would 'remain at elevated levels before declining to before 2% again in the course of next year'. President Draghi did not give much more detail about the OMT. Yet, he insisted that the ECB is ready if needed, but “now it's really in the hands of governments”, suggesting the central bank is waiting for the Spanish government's request for financial assistance.

The FOMC minutes suggested that key reasons for the decision to implement QE3 were the deterioration in the global economic outlook and manageable cost of QE3. Policymakers discussed on a crucial issue about shifting from calendar date-based policy targets toward data-driven thresholds. Yet, the change is not without challenge. Some concerned that using the explicit numerical thresholds would be “too simple to fully capture the complexities of the economy and the policy process or could be incorrectly interpreted as triggers prompting an automatic policy response”. The Fed pledged to do 'further work' related to better communications with the public.

The US employment data for September was a positive one. Non-farm payrolls increased +114K, following an upwardly revised +142K in August. The unemployment rate dropped significantly to 7.8%, the lowest since January 2009, from 8.1% in August, compared with market expectations of a pickup to 8.2%. Yet, investors should not rest assured that the job market in the US has improved materially and future unemployment rate would not rise above 8% again as the September data was in part distorted by seasonal factors and an increased number of part-time workers due to “economic reasons”.

Crude Oil: The front-month contract for WTI crude oil fell for the third consecutive week, accumulating loss of -10.5% following the rally to a 5-month high of 100.42 last month. The decline in prices was mainly driven by concerns over the demand outlook on deteriorating global economic prospect. Brent crude oil slipped -0.33%, showing more resilience than the WTI benchmark as “helped” by delay of Forties cargoes and Nigeria supply disruption.

Oil supply was mixed last week. On the positive front, Iraq’s oil exports increased to 2.6M bpd on average in September, the highest level since 1979, compared to 2.57M bpd a month ago. Meanwhile, Iraq's autonomous Kurdistan agreed to continue exports as the region and Iraq settled a payment dispute. Oil export from Kurdistan rose to 170K bpd and is expected to reach 200K bpd "within days". Elsewhere in Russia, crude production last month reached a post-Soviet monthly high of 10.41M bpd due in part to projects such as Sakhalin-2.

On the flip side, further cargo delays in the North Sea raised concerns over oil supply. It’s reported that 3 more Forties crude cargoes for export in October were delayed and the total number of cargoes deferred reached 10 for the month. Longer-than-expected maintenance at the Buzzard oil field and output reduction from other fields in the North Sea were key reasons for the delays.

Natural Gas: The DOE/EIA reported that natural gas inventory rose +77 bcf to 3 653 bcf in the week ended September 28. Stocks were +272 bcf higher than the same period last year and +281 bcf above the 5-year average of 3 372 bcf. Separately, Baker Hughes reported that the number of gas rigs added +2 units to 437 in the week ended October 5. Oil rigs decreased -12 units to 1 398 and miscellaneous rigs slipped -1 unit to 2 units and the total number of rigs slid -11 units to 1 837. Directionally oriented combined oil, gas, and miscellaneous rigs rose +2 units to 194 units while horizontal rigs decreased -10 units to 1 132 and vertical rigs dipped -3 units to 511 during the week.

Precious Metals: PGMs glittered last week, outperforming gold and silver as labor strike in South African mines remained a concern. Anglo American Platinum was reported to have fired 12K workers who refused to return to work Friday as the company attempted to contain the strikes which have spread to many parts of the country. Strike against Lonmin ended as the company and the workers reached into an agreement of pay rise. Labor actions certainly have affect production. It’s expected that platinum production has dropped to around 400k oz.

Oil and Gold Reports contributed by Oil N' Gold