Oil price recovered to 40/41 level after plunging to 39.65 yesterday as OPEC members hinted further production cut if oil price does not rise from current level. However, any rise was dampened by the bearish API inventory report.

Jose Maria Botelho de Vasconcelos, oil minister in Angola, said that new measures may be taken at the meeting in Mar 15 if the current round of reduction failed to raise prices. Botelho de Vasconcelos commented it would good if oil price can be lifted up to $75/bbl.

Despite OPEC's efforts, it may still be difficult for the black gold to come out from the trough as demand deteriorated much more rapidly. API, an industry-funded organization in the US, reported that the country' oil supply added 8.13mmb to 346.2 mmb last week. For gasoline, stockpile increased 2.1mmb, almost doubled what was expected. For distillate, however, a draw of 0.8 mmb was reported.

If we use API's report as a guideline for the US Department's calculation, crude oil should have built 7.1 mmb in stockpile for the week ended Jan 30, significantly higher than the 3 mmb as surveyed by Bloomberg.

Gold price lost support level at $900/oz and plunged to as low as 889.8 Tuesday as traders found last week's rally overdone. Despite this, many analysts view this as a good buying opportunity for long term advance in gold prices. UBS raised its forecasts for gold and silver for 2009 as led by their safe-haven appeals. Gold price in 2009 was revised up to $1000/oz (-43% from previous forecast) while silver price was raised to $14.75/oz (+76% from previous forecast).

Platinum contract was sold down to as low as 956.7 before recovering to close at 964.7 as disappointing auto sales in the US spurred worries on demand for the white metal. Light vehicles sales dropped to 9.6M units in January, worse than consensus of 10.2M and 10.3M in December. It's also the lowest level since 1982. Decline in fleet sales from the 3 auto giants were huge with GM, Ford and Chrysler reported 80%, 65% and 81% drops, respectively. On the credit side, lending from GMAC remains restrictive.