Crude oil price resumed recent rally after a 2-day selloff as an industry report showed unexpected withdrawal in crude inventory and the USD met renewed selling pressure. WTI crude oil price rose to 70.69 before settling at 70.01, +2.8%, Tuesday. In Asian morning today, the gauge is trading at 70.6 and will likely extend further gain should the report from US Energy Department deliver good result.

API reported that crude inventory dropped -5.96 mmb for the week ended June 5 as imports plunged by 0.5 mmb and refinery runs rose by 0.2 mmb. While stockpiles for gasoline and distillate increased, the rise was less than anticipated. Economists now forecast the report by the US Energy Department would show that crude inventory drew slightly by -0.5 mmb to 365.4 mmb. Gasoline stockpile probably gained +0.75 mmb, the first gain in 7 weeks while distillates stockpiles rose +1.5 mmb.

The US Energy Department upgraded its estimates on energy prices for 2009 and 2010. In its Short Term Energy Outlook for June, the Department said that it forecasts WIT crude oil price will average 67 for the second half of 2009. While this is a 12 increase from May's projection, it's still below current price level. The annual average regular-grade gasoline retail price in 2009 is expected to be 2.33 and 2.56, compared with previous forecasts of 2.33 and 2.56 in 2009 and 2010, respectively. Concerning world oil consumption, the Department has also raised its forecasts to average of 83.68 mmb in 2009 and 84.41 mmb in 2010, up slightly from previous forecasts.

The dollar weakened against major currencies as improved economic outlook boosted demand for higher-yield assets again. The dollar index plunged by almost 1% to 80.28 Tuesday. New Zealand and Australian dollar were among the best performers, driven by both interest differentials and surge in commodity prices.

Gold price also gained as USD dropped. The benchmark contract for the yellow metal climbs to 959 in Asian morning after edging slightly higher yesterday. GFMS analyst said that gold's rising trend may end soon as rising unemployment and lack of credit expansion drive asset-price deflation. While there's chance for gold to break through 1000 and rise to 1100 later this year due to safe-haven buying, the analyst believed the precious metal should trade 100 lower than what it is now in 2010.