Rising to as high as 70.25 in Asian Monday, crude oil price trades above 70 for the first time in a month as China reported strong PMI data. Stock market is also boosted higher after the report.

The Federation of Logistics ad Purchasing reported over the weekend that China's PMI rose to 53.3 in July from 53.2 in June, the 5th monthly expansion as driven by the government's stimulus spending and subsidies to various industries.

Asian stocks are mixed but with an overall upside bias after the data with the MSCI Asia Pacific Index gains +0.5%. In China, the CSI 300 Index edges +0.4% higher with base metal companies leading the rise. In Japan, Nikkei 225 Stock Average slides -0.3% to 10351 although Mitsubishi UFJ returned to profit in the first 9 months of the fiscal year.

Economist Nouriel Roubini said that commodity prices may rise further in 2010 as 'global economy goes toward growth as opposed to a recession'. Over the weekend, former Fed Chairman Alan Greenspan also forecast that the worst economic recession in the US is ending and the growth may come faster than previous anticipated.

The new fuel pricing regime in China has triggered vigorous debate since introduction last December. Chinese news said that the 2 largest national oil companies, Sinopec (0386.HK) and Petrochina (0857.HK), said that the current pricing system is too 'simple and transparent' for speculators to predict changes. However, the government has stated that it will continue implementing the system while trying to fine-tuning it during the process.

The current system allows the Chinese government to adjust domestic ex-factory fuel prices when international crude oil price changes more that 4% over 22 working days. Since adoption, the government have cut fuel prices twice and raised them twice.

Gold price rises for the 3rd consecutive day as USD index to the lowest in 2009. Market focus today is US' ISM Manufacturing Index. Consensus forecast it will increase for the 7th month to 46.5 in July, highest since August 2008, from 44.8 in June. More and more analysts forecast the reading will go above 50 (representing expansion) in 3Q09. Better confidence on the economic outlook has increased investment in risk assets and hence reduced demand for USD.

Commitments of Traders
  • Crude Oil: Net speculative long positions recovered to 4576 contracts last week but remained at historical-low level
  • Natural Gas: Net shorts remained at high level. The trend is still bearish as investors remained concerned about the huge gas storage
  • Gold: Net speculative long positions were largely unchanged at 173K contracts. Investment demand for gold has diminished significantly from the peak in February
  • Silver: Net speculative long positions for silver rose 2786 contracts last week. Should market sentiment remain robust, silver price should outperform gold as industrial demand for silver should pick up as economy recovers
  • Platinum: Net long positions rose further to 10015 contracts last week