Crude oil pared most of the losses made over the past 2 days as driven by strength in stock markets and decline in USD. The front-month contract surged to as high as 82.04 before closing at 81.7, up +2.4%. Investors viewed the Fed's commitment to keep its policy rate low for an extended period as positive as expansionary monetary policy should boost recovery. After market close, API's report that showed inventory draw for major oil products made the bulls even more excited. Today in Asia, crude oil extends gains to 82.29. OPEC's announcement after the meeting and EIA' s inventory report will direct near-term price outlook.

The market was thrilled as S&P affirmed Greece's BBB+ credit rating (investment grade) and dropped it from negative CreditWatch. In the accompanying press release, the rating agency stated the Greek government's total package of deficit reduction measures is 'appropriate to achieve its 2010 fiscal target, given the deterioration in Greece's growth prospect'. That said, the agency believed it would be difficult for Greece to comply fully with its planned consolidation path, reducing its deficit to 5.6 % of GDP in 2011 and 2.8% of GDP in 2012, if it does not implement additional measures in the coming years.

The euro, the pound as well as commodity currencies jumped and hence dragged the dollar index down to 79.75, the lowest level in a month. Equities were also strong with DAX and CAC 40 Indices gaining +1.14% and +1.23%, respectively. In the US, DJIA and S&P also added +0.4% and +0.8%, respectively.

Magnifying the sentiment was FOMC's statement. In fact, the decision to keep the Fed funds rate unchanged at 0-0.25% and retain the pledge to keep rates low for an 'extended period' had been widely anticipated. However, it's a good sign to see the Fed change some wordings in the statement. For instance, the Committee said the job market has been 'stabilizing' while business spending on equipment and software 'has risen significantly'. These did not appear in previous minutes. At the same time, the Fed staying accommodative is good for the economy as recovery remains gradual and fragile for the time being.

After market close, the American Petroleum Institute reported decline crude oil inventory. According to the industry-sponsored agency, crude inventory drew -1.2 mmb in the week ended March 12. Gasoline stockpile dropped more than -3 mmb for another week while distillate stockpile slid -0.76 mmb.

The US Energy Department will probably report +1.1 mmb increase in crude inventory and modest decline in oil product stockpiles.

OPEC members are satisfied with current oil price and they are unlikely to change production quota at today's meeting. However, better compliance is needed as most members have been exceeding production limits in recent months. The latest OPEC report unveiled compliance level fell to 53% in February from almost 80% in March 2009.

Precious metals advanced with gold gaining +1.5% to settle at 1122.5 and silver adding +1.4% to 17.35. Weakness in the dollar and increase in market sentiment spurred demand for the commodity sector as a whole.
For PGMs, palladium surged to as high as 477 before closing at 472.4, up +2.6%, while platinum edged higher, by +0.9% to 1630.7.