WTI crude oil failed to sustain gain above 100 level and dropped sharply back below 99. Further loss is seen today after report showed unexpected rise in supplies. Inventories rose 3.9m barrels in the week ended December 23 as reported by the US Energy Department, comparing to consensus of -2.5b fall in stockpiles. Yesterday, API reported 9.5m barrels jump in inventories. Technically, the break of 99.37 minor support in TWI suggests short term topping. More importantly, the development indicates that recent consolidation from 103.37 is still in progress and is starting another falling leg. Thus, we'd probably see WTI crude oil pressured in near term back towards 95 and below.
On the other hand, gold also takes out key support of 1535 made back in September on broad based dollar strength. The greenback strengthened strongly across the board today after decent by unimpressive Italian bond auctions. Gold would likely remain pressured in near term on dollar strength. However, technically speaking, it's now staying in key support zone of 1478.3/1577.4. We'd anticipate strong buying below 1500 psychological level to contain downside and bring at least a short term rebound attempt.
Italy sold EUR 7.02b of 3- to 10-year bonds today, below maximum target of EUR 8.5b. Sales of 2022 bond hit max target of EUR 2.5b. Yield was just below the unsustainable 7% at 6.98% even though it dropped from November's 7.56%. Yield on the three year bond due in 2014 dropped from November's 7.89% to 5.62%. However, sales of 2014 and 2021 bonds fell short of the maximum target. This week's result so far firstly suggested that short term funding stress was eased for Italy, but investors are still uncertain on the longer term outlook. Secondly, the fact that the three year bond auction sourly missed target raised much concern that the ECB's EUR 489b three year LTRO fund are not channeled back into peripheral bonds markets. Eurozone M3 money supply rose less than expected by 2.0% yoy in November.
On the data front, US initial jobless claims rose more than expected to 381k in the week ended December 24, the first rise in a month. Nonetheless, the figure managed to stay below 400k market. Prior week's figure was revised slightly higher to 366k. The four week moving average dropped to 375k, best number since June 2008. Continuing claims also rose 34k to 3.6m in the month ended December 17. Chicago PMI was steady at 62.5 in December. Pending home sales rose strongly by 7.3% mom in November. Natural gas storage dropped -81b. Eurozone M3 money supply rose 2.0% yoy in November.