Crude oil extends gain to 64 in Asian Monday, the highest level since July 7, with the support of strong stock market. However, we believe correction will resume soon with 66.25 level remains the key resistance as recent robust trading momentum has been driven by market sentiment rather than fundamentals.

Asian stock markets rise further with the MSCI Asia Pacific (ex-Japan) Index gains +2%. Australia's S&P/ASX Index climbs +1.3% while Hong Kong's Hang Seng Index jumps +2.4%. Investors remain thrilled by China's better-than-expected GDP growth in 2Q09 and US' potential bottoming of housing market.

We can also see the market's risk appetite in the currency market. Japanese yen, low-yield currency which is usually used in carry trade, plunged to 134.1, a 2-week low against the euro as investors look for investment in higher-yield assets.

At the same time, USD slides to 1.416 against the euro and is approaching to 1.42 the lowest level since July 1. Last week, some companies reported above-consensus earnings result for 2Q09 and this exerted further downward pressure on the dollar as research showed that USD falls 85% of the time during reporting season when earnings beat market expectations.

Gold price rises for the second consecutive day and is currently trading at 941 in Asian session. Strength in crude oil price and weakness in USD will likely drive price higher in the near-term. However, we would like to reiterate that we are yet to see a resumption of the yellow metal's uptrend given sluggishness in investment demand.

Commitments of Traders
  • Crude Oil: Net speculative long positions recovered to 16K after the news about tighter CFTC regulations in the prior week weighed on investment demand. Strong rebound in crude price also spurred speculations
  • Natural Gas: Net shorts continued to rise given the poor fundamentals. Industrial Energy Consumers of America urged the government to block expansion of ETF investment. The protest may also have impacts on futures investments
  • Gold: Traders trimmed net long positions in the yellow metal, making it struggle to move higher. We believe consolidation within current price range will continue in coming months
  • Silver: Following gold's lead, net speculative long positions in silver plunged more than 3K contracts to 21K
  • Platinum: Net long positions declined after rising for the 5 weeks