Buying interest emerged as crude oil dropped below 70 and the benchmark contract ended the day +0.8% higher at 71.97. Heating oil and natural gas prices also surged, by +2.9% and +1%, respectively, while gasoline price plunged -0.3%.

US Energy Department reported another week of crude build despite decline in imports. Refinery runs fell -0.171M bpd to 14.43M bpd, as refiners trimmed production in light of weak product demand. Cushing stocks rose +1.2 mmb and we believe this will render WTI time spread under pressure as Cushing is where WTI crude is stored.

Although heating oil price soared due to reduction in distillate stockpile, the draw was because refiners have shifted production from distillate to jet fuel (jet fuel stock gained +1.4 mmb). Overall, product demand remained bleak.

Gold price sank to 961.1 before recovering to 966.3, -0.4%, as disappointing ISM non-manufacturing data halted rallies halted rally in stocks and boosted USD. Dip in crude oil price shortly after inventory report also pressured the yellow metal.

Despite recent sluggishness in gold price, we retain our long -term bullishness as worldwide central banks' exit strategies from stimulus will not be smooth. In the quarterly monetary policy report, the People's Bank of China once again warned that the monetary easing by developed nations will cause serious inflation and currency volatility.

On the other hand, silver added +0.4% to settle at 14.76. We believe recent strength in silver price has been driven by investment demand as its fabrication demand remained weak.

Stock markets show mixed performance in Asia today. In china the Shanghai Composite Index plunged -3% as investors viewed current valuations too high. In Japan, Nikkei 225 Stock Average gains +0.9% despite a more than -10% slump in Nikon shares. In Australia, the S&P/ASX Index adds +0.8% after the employment report showed unexpected increase in job positions (+32.2K, consensus: -18K) in July.