The Energy complex continued to rally Thursday with WTI crude oil price gained 0.7% to settle at 56.71. The benchmark contract surged to as high as 58.57 earlier the day as better-than-expected economic data in the US boost market sentiment. However, retreats in stock markets afterwards dragged oil price lower. Currently trading at 57.4, it seems that trading-range of the black gold has been lifted since breach of resistance 54.66. Our technical team said the next target would be around 61.12.

The US Government reported that productivity rose +0.8% in 1Q08 from a -1.4% decline in the previous quarter while unit labor cost grew +3.3%. Moreover, initial jobless claims dropped to 601K, lower than market expectation of 639K and 631K in the previous week. Elsewhere, Australia's unemployment rate surprisingly fell to 5.4% in April from 5.7% a month ago. As more encouraging economic data come out in the US as well as other parts of the world, investors become more confident that economic recovery is near.

Banks' stress test result showed that 10 out of the 19 banks must raise additional capital, totaling 74.6B against potential loss over the coming 2 years. Requirement for Bank of America is the highest at $34B while that for Citigroup is about $5B. The rest are Wells Fargo: $15B, GMAC: $11.5B, Regional Financial: $2.5 B, Suntrust Banks: $2.2 B, Morgan Stanley: $1.8 B, KeyCorp: $1.8 B, Fifth Third Bancorp: $1.1 B, PNC: $0.6 B. The result was better than previous estimate of capital needs of $180B.

Currently trading at 4.13, natural gas price continues to advance higher after surging more than 10% in the previous 2 days. The market obviously ignored the fact that gas storage in the US rose 95 bcf, slightly above consensus of a gain of 93 bcf, to 1.918 bcf for the week ended May 1. Current inventory level is 23% higher than the 5-year average.

Gold price edged slightly higher to close at 915 yesterday. While some investors began to buy gold to hedge against inflation, signs of economic stabilization drove others away to riskier assets. Therefore, the yellow metal only managed to gain 0.5% despite a spike to as high as 926.5 earlier the day.

Other precious metal also strengthened with the silver contract climbing 2.3%, platinum was up 1.2% and palladium surged 6%

Strength in PGM group metals, despite the reported loss in GM in 1Q09, was probably driven by robust auto demand in China. A Chinese news press quoted from a representative from China Association of Automobile Manufacturers (CAAM) that auto sales in China probably rose 25% in April from the same period last year. General Motors reported that its 1Q09 net loss widened to $5.98B as sales declined by 50%. This increased pressure for the biggest US automaker to go bankrupt.

Focus today has turned to employment data in the US. While economists forecast non-farm payroll probably dropped 620K in April, less than 663K drop in March, the actual result may come in even better than anticipated given the surprises in initial jobless claims data in recent weeks. However, employment rate should have risen further to 8.9%.