Crude oil price fluctuated between 70 and 72 yesterday as macroeconomic and industry data showed mixed results. The September contract ended the day at 71.42, down -0.2%. Gasoline and natural gas also dropped -0.6% and -0.7% respectively while heating oil gained another +1.6%.

Profit-taking was seen in oil throughout the day especially in NY morning as US personal income disappointed the market. Personal income dropped -1.3% in June, worse than consensus of -1%. May's reading was also revised down to +1.3% from +1.4%. However, buying interest emerged again after pending home sales rose +3.6% yoy in June, compared to +0.8% in the prior month.

Inventory report from API should have further drive sentiment higher. According to the industry-sponsored agency, crude inventory surprisingly drew -1.52 mmb, compared with consensus of a gain of +0.5 mmb, to 350.9 mmb in the week ended July 31. Distillate stockpile also dropped -1.04 mmb to 157.9 mmb while analysts had expected an increase of +1.05 mmb. However, rise in Cushing stocks and huge increase in gasoline stockpile (+2.09 mmb) remained the overhangs.

In Asia session today, the black gold trades narrowly below 72. While bulls will want to push price higher by manipulating the macroeconomic sentiment, whether crude oil can set a new 2009 high depends on stock market performance.

Gold price rallied for the 4th straight day and settled +1.1% higher at 969.7 Tuesday. The yellow metal surged to as high as 972.7 as the dollar weakened. Other precious metals outperformed gold with silver jumping +3.1% to settle at 14.7, platinum rising +3% to 1276.8 and palladium adding +2.3% to 280.8. While investment demand in gold has been waning, we continue to see capitals flowing into other precious metals, eg, silver. Gold/silver ratio has been declining since July and we believe the trend will continue as better economic outlook will benefit silver more than gold, given the higher industrial demand in the former.