WTI crude oil rebounded sharply to as high as 70.29 Tuesday as API reported unexpected draw in crude inventory last week. The benchmark contract finished the day at 69.19, adding +3.7% during the day. Both RBOB gasoline and heating oil also surged, by +2.7% and +2.1%, to 2 and 1.87, respectively. However, natural gas continued to sink deeper and was down -2.1% yesterday.

The industry-sponsored API reported crude inventory dropped an impressive -6.13 mmb, compared with consensus of a +1.19 mmb gain, to 342.4 mmb in the week ended August 14. The draw was driven decline in imports as well as increase in refinery runs. However, Cushing stocks rose +0.795 mmb in the week.

Product inventories were not as encouraging as what we saw in crude. Gasoline stockpile dropped -0.85 mmb but was less than market expectation of -1.25 mmb decline. Demand was down -9.15M bpd. Distillate inventory surged +1.53 mmb with demand rising modestly. Market had anticipated a much milder gain of +0.55 mmb.

In Asian session today, the black gold trades within a narrow as the market awaits the report by US Energy Department. The market forecast the report will say crude inventory added +1.2 mmb before release of API data. Recently, data by API and US Energy Department tend to move with consistence, it's quite possible for us to get some pleasant surprise later today.

US stocks advanced despite worse-than-expected housing data. Strong sentiment in European stocks after Germany's confidence data spread to the NY session. Dow Jones Industrial Average added +0.9% to 9218 while S&P 500 Index gained +1% to 990.

US housing starts fell slightly to 581K in July from an upwardly revised 587K in the prior month. Analysts had expected an increase to 598K. Building permits also plunged to 560K from 570K in June. However, looking into details, the trend of US' housing market has still improved in 3Q. Single-family housing starts, used to be the growth driver, continued to rise, by +1.7%. Although multi-family starts dropped in July, the pace of decline has moderated and the situation may turn better in coming months.

Today in Asia, stocks rise as led by commodity and automakers. The MSCI Asia Pacific Index gains +0.3%. Australia's S&P/ASX 200 Index adds +0.6% while Japan's Nikkei 225 Stock Average fluctuates between gains and losses.

Gold price climbed +0.4% to close 939.2 as driven by the broad-based recovery in commodity markets and weakness in USD. However, silver price slid -0.1% to 13.96. According to the US Treasury, China has reduced its total holdings of US government securities by $25.1B to $776.4B in June. This reinforced the nation's intention to diversify its foreign exchange reserves away from the dollar. We expect more funds will flow into gold.