WTI crude oil for February delivery rose to as high as 50.47 Tuesday and then retreated to close at 48.58 due to profit-taking. Today, the black gold continues to hover around 48/49. Near-term outlook remains strong and further rebound is likely after consolidation.

Gaza tension has entered the 12th day with Israel facing more international pressure on ceasefire and its troops bombed an UN-run school in Northern Gaza and killed at least 30 Palestinians hiding there.

Later in US session, the US Department will report petroleum inventory for the week ended Jan 2. According to Bloomberg survey, crude oil stockpile probably added 0.9 mmb while that for gasoline and distillate increased 1 mmb and 1.1 mmb respectively. Figures higher than these may damp oil's strength.

In fact, recent rally in oil price was due to the oversold condition in late December, together with intensified Middle East tension. On the data front, we have not seen much improvement in economy yet. Yesterday US released pending home sales in November which dropped to 82.3 from a revised 85.7 in October. In the FOMC minutes of Dec 15-16 meeting released yesterday, the FED said the economic outlook will remain weak with substantial downside risk.

Gold had a directionless trading day as price first plunged to $838.8 and then surged $33/oz to $871.4 before settling at 866. Today, the precious metal trades narrowly with a soft bias in Asian morning. The dollar's rebound was strong with the dollar index reaching as high as 84.02 (our projection was 84) before pulling back to 83. The greenback gains against major currencies, especially after GM, the biggest automaker in the US, said that the loan pledged by the government should be sufficient for keeping the company survive. Other good news for the dollar are Obama's US$ 775B plan to rescue economy as well as high chances for the ECB to slash interest rate by at least 25 bps next week.

In Asia, stock markets continue its rising streak with MSCI Asia Pacific Index gained 2.1% and Japan's Nikkei 225 Stock Average climbed 2.4%. Stimulated by GM's announcement, Honda, Japan's second biggest automaker, advanced 9.5% while Toyota surged 4.6%. Commodity shares such as Rio Tinto and Fortescue rose 7.6% and 7%, respectively, following rebounds on oil and other commodities which were oversold towards end-08.