Crude oil price remains strong after jumping +3.2% to settle at 77.58 Thursday as the huge decline in gasoline inventory thrilled investors. Currently trading at 78, the benchmark contract has already rallied for a 7th consecutive day. We believe the rise will stabilize as price is entering overbought territory and investors should take profits. Others in the energy complex also advanced. Heating oil surged +4% to close at 2.018 while RBOB gasoline rose +4.7% to settle at 1.945.

Crude oil inventory increased +0.33 mmb as driven by large builds of +4.1 mmb at the Gulf Coast and -0.51M bpd decline in refinery runs to 14.1M bpd. These were partly offset by draws in other areas. Moreover, crude imports also fell modestly, by -0.37M bpd to 8.73M bpd.

Huge draw in gasoline stockpile was brought by decline in supply which demand remained resilient. Weekly demand of 9.256M bpd was almost the same as the previous week but was +4% above the same period last year. On 4 weeks' basis, demand was 9.11M bpd, increased +0.6% and +3.9 on weekly and annual basis respectively. Distillate inventory dropped -1.1 mmb due to decline in imports. However, demand remained subdued. Although demand for the week represented a mild increase of +0.8% on weekly basis, it's still -11% below last year's level.

The headline inventory draws indeed looked bullish for energy prices. However, the details inside suggested that we are not yet out of woods as fuel demand had showed only modest improvements. The vigorous movement in oil price was also amplified by USD's weakness against major currencies.

Gold price plunged -1.3% to settle at 1050.6 on profit-taking. Silver and platinum also followed suit with the former sliding -2.8% and the latter dropping -0.8%. USD index sank to 75.48 yesterday as the British pound rebounded strongly amid speculations that the BOE will not extend the asset purchase program after some positive economic data (e.g.: unemployment rate) released in the nation this week. Moreover, MPC member Paul Fisher's comment on the effectiveness of the monetary stimulus made investors more bullish on UK's economic outlook.

Japanese yen tumbled as US data indicated economic recovery and fueled expectation that the Fed will raise its policy rate earlier than previously anticipated. Initial jobless claims declined to 514K last week, compared with consensus of an increase to 525K. Moreover, Empire State manufacturing index jumped to 34.57 in October from 18.88 a month ago. The market had anticipated a retreat to 17.75. Although Philly Fed dropped more-than-expected to 11.5 during the month, there's still possibility for the ISM index to expand in October.