Crude oil price spiked to 75 after the US Conference Board reported that consumer confidence beat market expectation and rose to 54.1 in August. However, profit-taking followed and the benchmark contract retreated to 72.05, -3.1%, for the day. After market trading remained weak as the industry-sponsored API reported huge increase in crude inventory in the week ended August 21. Others in the energy complex also plummeted with RBOB gasoline and heating oil losing -2.1% and -3.5% to 2.01 and 1.86, respectively.

API reported that crude inventory built +4.35 mmb, compared with consensus of a -0.45 mmb draw, to 346.7 mmb last week. Rebound in imports together with decline in refinery runs pushed stockpiles higher. However, -1.4 mmb draw in Cushing stocks helped alleviate pressure in WTI front month contract price.

Demand for oil products probably bottomed in previous weeks. Gasoline stockpile dropped +1.80 mmb while distillate stockpile plunged -0.15 mmb as demand continued to rise on weekly basis. Both readings came in better than market expectation.

The majority of analysts expect the US Energy Department's report will show that crude inventory drew -1.15 mmb last week. The estimate was revised from -2.05 mmb Monday. For gasoline and distillate inventories, the market anticipates the former probably fell -1.4 mmb while the latter gained +0.15 mmb during the week.

The consumer confidence index improved strongly to 54.1 in August, better than market expectation of 48, from 46.6 in the prior month. The main reason for the increase was the 10 points rise in 'expectation' index. The labor market differential improved to -40.9% from -44.8, suggesting that although unemployment rate may continue to rise, the increase should be small.

Gold and silver prices climbed slightly higher, by +0.2% to 946 and +0.8% to 14.31 respectively, as USD weakened (-0.1%) against the euro. Platinum price was largely unchanged at 1248 despite strike at Impala, the world's second largest platinum producer. Although the workers agreed with the +10% pay rise offered by the company, they were dissatisfied with the delays in reaching the agreement. The mine that is affected by the strike, the Rustenburg mine, is the biggest individual platinum mine in the world. In 2007, the +33% surge in platinum price was partly driven by mine strikes. However, we do not believe the impact will be as great this time as Impala will meet labors today to solve the problem.