Crude oil retreated as USD pared loss and industry report showed decent increase in stockpiles. Expired Tuesday, the November contract fell -0.7% to settle at 79.09 after rising to as high as 80.05, the highest level since Oct 14 2008. The most active December contract also plunged -1.1 to close at 79.12.

Gold price initially rebounded to as high as 1069 but then met selling pressure amid USD's recovery and ease in inflation pressure (PPI). The benchmark contract finished the day at 1058.6, largely unchanged from 1058.1 on Monday.

Industry-sponsored API reported that crude oil inventory rose +3.85 mmb to 343 mmb in the week ended October 16 as driven by the decline refinery runs. The reading was more than doubling market expectation of a build of +1.46 mmb. Cushing stock also increasd +0.46 mmb last week.

Inventories for both gasoline and distillate drew. Gasoline stocks dropped +0.56 mmb (consensus: +0.44 mmb) but this was due to lower refinery runs. Demand slopped to 9.37M bpd. Distillate inventory drew -1 mmb (consensus: -0.97 mmb) as demand rose to 4.28M bpd and imports declined.

The US Energy Department will probably report that crude inventory increased +1.5 mmb last week while both gasoline and distillate stockpiles drew -1.5 mmb.

The dollar pared losses as stock markets plunged amid weaker-than-expected housing and PPI data. Moreover, strong warning from the BOC about CAD's strength also weighed on CAD and helped USD. The dollar index edged 5 bps higher to settle at 75.56. While there's little change on EURUSD, USDJPY and GBPUSD, commodity currencies pulled back as crude oil price retreated and CAD dropped -1.9% against the dollar.

The Bank of Canada announced to keep its policy rate unchanged at 0.25% in October. While acknowledging improvement in economic outlook, policymakers said that persistent strength in the Canadian dollar are working to' slow growth and subdue inflation pressures' and it will 'more than fully offset the favorable developments since July'.

On economic outlook, BOC projected a more modest recovery as compared with July's forecasts. 'The output gap will be closed in the third quarter of 2011, one quarter later than it had projected in July. Correspondingly, inflation is also expected to return to the 2 per cent target in the third quarter of 2011, one quarter later than in July's projection'. The central bank will release more detailed analysis on it November Monetary Policy Report Thursday.

US housing starts added +0.5% mom to 590K units in September (consensus: 610K) from a downwardly revised 587K units in the prior month. At the same time, PPI also unexpected fell -0.6% mom whith core PPI down -0.1% in September. Theses readings hurt sentiments temporarily and thus we saw profit-taking in both commodity and stock markets.

Today in Asia, we see both crude oil and gold trading narrowly with a soft tone. Consolidative trading will like continue until NY session as several Fed officials will speak and the Beige Book will be released today.