The bearish sentiment in energy market is carried forward to this week. WTI crude oil price extends the fall to 77.07 in Asian session Monday. While we are having a light calendar today, investors continue to sell the commodity because of the weak economic data released last week. Certainly, strength in USD also plays a role in pressuring oil price. Heating oil and gasoline also slide for the 6th day.
Although crude oil price has plummeted more than-7% from a 15%month high at 83.95, the OPEC remains comfortable with current price levels and some members do not see the urgency to increase compliance to quotas.
A survey showed that OPEC's compliance to quotas was reduced to 58% in December, from 60% in November and a peak of 81% in March and April. Iran, which produced 410K bpd above target last month, said that compliance adherence was a 'success'.
In late-2008, OPEC decided to keep its production at 24.84M bpd as demand collapsed. However, some members always exceed their quotas due to overcapacity or national budget issues. Since March, 2008, OPEC-11 production has been increasing as producing countries have been tempted by the rising oil price as most of the countries in OPEC rely on crude exports as their major source of revenue.
Gold trades narrowly at 1130. Consolidation likely remains as USD is also directionless. Outlook of central banks' monetary policies is hard to gauge and it also masks movements of the precious metal. In 2009, strong investment demand in gold stimulated demand for PGMs. However, the yellow metal's impact this year is expected to diminish sharply. Rather, strength in platinum and palladium will be driven by improvement in their own fundamentals as well as increased liquidity in ETF trading.
Commitments of Traders:
Crude Oil: Net speculative long positions surged for the 4th week to 135.7Kcontracts in the week ended January 12, as price surged amid strong economic data and extremely cold weather. Price rallied to a 15-month high of 83.95 and than reversed in the week, suggesting decline in net longs to be seen in coming weeks
Natural Gas: Net speculative short positions rose further to 163.8K contracts. Although cold weather might have increased gas consumption, it takes times to wipe out the abundant storage
Gold: Net speculative long positions recovered to 229.3K after dropping in the prior 2 weeks. Price rebounded strongly during the week as selloff below 1100 attracted buyers. Although net longs in gold have plummeted more than -10% from the peak in November, they remained at high levels
Silver: Net speculative long positions in silver soared to 445.3K last week. We expect net longs to drop in the coming week as silver price moved consolidative mode after rallying to 18.93 on January 11
Platinum: Net longs retreat to 20.4K contracts, the highest level in 4 weeks. The new launched US platinum ETF should trigger investment in other platinum instruments and net longs should rebound in coming weeks
