Crude oil extends Friday's decline and falls to around 80 in Asia Monday. While worries about Greece and tightening in emerging markets, the IMF's warning about debt situation in advanced economy worsens market sentiment.

Currently trading at 80.1, the front-month contract for crude oil slides for the third consecutive day. The contract surged to a 10-month high at 83.09/16 in previous weeks.

At the China Development Forum, John Lipsky, IMF's first Deputy Managing Director, said advanced economies are facing acute challenge in reducing the high public debt ratios that were created as a result of the crisis.

ccording to Lipsky, gross general government debt in the advanced economies will rise from an average of about 75% of GDP at end-2007 to about 110% of GDP at end- 2014, even assuming that the temporary, crisis-related stimulus measures are withdrawn in the next few years. All G7 countries except Canada and Germany will have debt-to-GDP ratios close to or exceeding 100 percent by 2014. In 2010, the average debt-to-GDP ratio in advanced economies is projected to reach the level prevailing in 1950, in the aftermath of World War II. Moreover, this surge in government debt is occurring at a time when pressure from rising health and pension spending is building up. On the contrary, the situation is better in emerging markets. The average debt ratio in emerging economies is expected to decline next year, after rising in 2009 and 2010.

The dollar stays firm with reasons Greece's sovereign crisis being the prior reason. Moreover, forecasts that the Fed will raise discount rate for the second time before the next FOMC meeting also send the currency higher.
Gold remain weak after slumping on Friday, driven by broad-based weakness in commodities and strength in USD.

China's Commerce Minister Deming Chen said at the China Development Forum that the US' sanction on China and the pressure on RMB's appreciation are 'no good to anyone'. Dispute between China and the US may affect trades between the world's biggest exporter and importer. History tells us trade tensions would trigger demand for gold as a safe investment.

Commitments of Traders:

Crude Oil: Net speculative long positions rose to 124K contracts, consistent with strength in price. We expect net longs will drop in the coming week. Traders either unwind their positions or go short as market sentiment diminishes amid concerns over Greece. Oil market fundamentals improved but are not strong enough to warrant a firm break above 84

Natural Gas: Traders continued to favor shorting natural gas futures due to dismal demand/supply outlook. Net short positions soared to a record of 186.98K contracts. While the number may drop in coming weeks due to position-squaring, outlook remains weak and may worsen later on as heating season ends

Gold: Net speculative long positions fell for the first time in 5 weeks although gold rose. Similar to gold price movement, near-term trend of net longs/net shorts is directionless

Silver: Inline with gold trades, net longs in silver slipped to 34.9K contracts. Silver has underperformed others in the precious metal complex in recent months, its heavy exposure in industrial applications may drive investors away should Chins speed up monetary tightening

Platinum: PGMs' performance has been far better than gold and silver as driven by stronger demand/supply outlook and ETF investments. Net speculative long positions for platinum rose for the 7th week to 22.3K contracts last week