Increase in crude inventory, decline in consumer confidence and retreat in stock markets dragged down crude oil price Tuesday. The benchmark contract plunged to as low as 66.48 before closing at 67.23, -1.7%. Natural gas, gasoline and heating also dropped by -1.9%, -1.2% and -1.8%, respectively. Crude oil continues to head to the south in Asian session today. A break below 63.76 would suggest the rise 58.32 has completed.

API reported that crude inventory surprisingly gained +4.07 mmb, compared with market expectation of a -1.05 mmb draw, to352.5 mmb in the week ended July 24. Decline in refinery and surge in imports were the main reasons. However, product stockpiles came in better than expected. Gasoline inventory dropped -0.047 mmb while distillate stockpile rose +0.12 mmb.

The US Energy Department will deliver its inventory report in NY session today. Consensus estimated that crude inventory would have drawn -1.5 mmb last week. This was 0.1 mmb higher than the -1.6 mmb decline forecast yesterday. Gasoline stockpile was anticipated to have dropped -0.65 mmb but analysts were diverged on their opinions. Distillates should have risen for the 7th consecutive week.

Stricter regulations on futures trading may also have depressed some speculators. The 3-day CFTC hearing began yesterday and the Chairman said that the US must seriously consider strict positions limits on energy market to curb speculation. Several parties, including the Petroleum Marketers Association of American and OPEC, attributed the +52% rally in oil price to a recorded of 147.27 to excessive speculations of energy futures.

US consumer confidence slid for the second consecutive month to 46.6 in July, compared with consensus of 49.1 and 49.3 in the prior month. Declines were seen in both the expectation index and present conditions index. Worsening mood of consumer was driven by sluggishness in the job market as the survey showed that only 3.6% of the interviewees, the lowest since 1982, thought that jobs were plentiful.

The report triggered profit-taking in both the commodity and stock markets. Dow Jones industrial halted the 11-day rally with -0.13% decline and closed at 9097. S&P 500 Index also slipped -0.26% to 979.6.

Gold price dropped -1.5% to 939.1 while silver slid -1.8% to 13.74. For PGMs, platinum and palladium plunged -2.1% and -1.5% to 1196.6 and 260, respectively. Rebound in USD was the main reason for the broad-based plummet.

Further reduction in gold investment and settlement in wage negotiation in South African miners are probably negative for gold price. SPDR Gold Trust reported decline of -3.36 metric tons of bullion holdings to 1083.25 metric tons yesterday. Gold companies and miners agreed at pay increases of 9-10.5% this year. This lifted the overhang of potential production disruptions.