Crude oil price rose +0.8% to settle at 62.02 Thursday as driven by strong rally in stock markets as initial jobless claims data dropped more than anticipated. Gasoline and heating oil also climbed +0.3% and +1.1% to close at 1.71 and 1.6, respectively. However, the best performer among the energy complex and possibly the commodity sector was natural gas which jumped +11.7% to close at 3.67 as rise in gas storage rose less than market expectation. Currently trading at 61.6, the black gold retreat in Asian session today as the dollar recovers as investors seek safe investments again after explosions in Jakarta.

The US Labor Department reported that initial jobless claims dropped to 522K, less than consensus of 555K, in the week ended July 11, from 565K in the previous week. Although the Independence Day holiday and seasonal factor in the auto sector might have affected the result, this sent a positive signal to investors that the employment condition has started to get better. Certainly, we have to wait for more data points in coming weeks to confirm as weekly data are normally highly volatile. Moreover, continuing jobless claims in the week ended July 4 also plunged -9.3% to 642, the largest decline on recorded, while the insured unemployment rate fell to 4.7% from 5.2%. These were indeed good signs.

Stock markets soared as shrugged off the news that CIT, whose application for a federal bailout was rejected, will very likely go bankrupt. In the US, Dow Jones Industrial Average gained +1.1% to 8712 while S&P 500 Index gained +0.86% to 941. In Europe, benchmark indices for the UK, Germany and France closed higher.

According to consultancy Oil Movement, OPEC seaborne oil exports, excluding Angola and Ecuador, will drop 0.19M bpd in the 4 weeks to August 1. Seeing correction in oil price in recent weeks, a member of Kuwait&'s Supreme Petroleum Council said that OPEC may cut output in September if oil falls below 50-55. However, just a few weeks ago when oil price was rallying, some members said that they would not change production and might consider increasing output only when price rose to 100. We continue to expect the OPEC to keep quotas unchanged at September&'s meeting and view these as usual verbal tricks from the cartel.

The US Energy Department reported that natural gas supplies rose 90 bcf to 2886 bcf in the week ended July 10. Although the result was only slightly better than market expectation, the narrowing gap with the 5-year average signaled improvement in fundamentals. Storage last week was 18.7% higher than that 5-year average, declining from 19.3% in the prior week and was the 4th consecutive narrowing. This may also be a sign that the huge drop in gas rigs is taking effect on supply.

Gold price plunged -0.4% to settle at 935.4 Thursday while silver, platinum and palladium all gained, by +0.2%, +1% and +0.7%, respectively. The main reason for gold&'s divergence from other precious metals was its recent weakness in investment demand. Holdings in SPDR Gold Trust slid-3.5% so far, after reaching a peak of 1134.03 metric tons (36.5M oz) in early June. Similar pattern was seen in EFT Securities. Total gold holdings dropped -1.9% to 7.53M oz as of July 16 from the peak of 7.68M oz in June. On the other hand, demand for platinum and palladium, especially the latter, remained robust. ETFS showed that current palladium holding at 345.5K oz is at all time high.