Crude oil price rallied to as high as 82 after the EIA report showing modest build in crude stockpile and huge draw in gasoline stockpile. Moreover, investors felt safe to sell USD as the Fed will likely keep its policy rate low for a long while. The benchmark contract (December) ended the day +2.8% higher at 81.37. RBOB gasoline also jumped +3.3% while heating oil also gaining +2.8%.

The inventory report by the US Energy Department (EIA) was much more bullish than the one by API. Total crude stock rose +1.3 mmb but the majority of build was from the West Coast. Refinery runs remained low during the week as the production facilities were shut down for maintenance. As product cracks rebound, there's risk of rising refinery runs in coming weeks.

Decline in gasoline inventory was larger-than-expected (-2.2 mmb). However, decline plunged -3.3% to 8.95M bpd last week. This reading was the lowest in 4 weeks but it was understandable amid the end of the summer driving season. Distillate inventory drew -0.78 mmb as driven by decline in refinery. Similar to gasoline, demand slid -2% to 3.487M bpd during the week. Although distillate demand has been going up since the trough in July, the growth was slow and total consumption remains as historical low level. Overall, the inventory report suggested improvement in energy fundamentals but we need a few more weeks of supportive data to justify a sustainable rally in oil prices.

Today in Asia, crude oil price continues to trade above 80. Robust economic development in China, the world's growth locomotive, indicates strong demand momentum. China's GDP expanded +8.9% yoy in 3Q09, the fastest pace in a year, as driven by government's stimulus measures. The Chinese government stated that it will maintain stimulus measures even after the economy exceeded expectation. Moreover, the government's focus is now on inflation. CPI rose +0.4% mom in September. On annual basis, the contraction also slowed down to -0.8%, the smallest decline since February.

Gold price pared early losses as the euro strengthened and broke above 1.5 against USD. Although bullion holdings in SPDR Gold Trust recorded yesterday a first drop since October 7, robust market sentiment and decline in USD should remain supportive for the yellow metal.

Risk appetite increased and the market anticipated strong results from US leading indicator and Germany's business confidence. The Conference Board's leading indicator probably rose for the 6th consecutive month, by +0.8%, in September while Germany's Ifo business climate index should have increased to 92 in October from 91.3 a month ago.

The pound gained +1.4% against the dollar as the tone in October BOE minutes was less dovish than before, Moreover, policymakers seem to be more comfortable to the pace of economic recovery and less aggressive to extend QE policies.

Among the commodity currencies (CAD, AUD and NZD), NZD was the best performer with a +1.3% gain against USD. RBNZ Governor Alan Ballard said yesterday that strength in New Zealand dollar is not an impediment to raising interest rate. This eased investors concerns that a strong currency may delay recovery. Moreover, this increased the likelihood that the central bank may hike rate earlier than previously projects.