Crude Oil Rallies to 17-Month High as US Job Data Shines

Crude oil jumped on the first day of trading after the Easter holiday as boosted by strong US economic data, particularly the employment report, and robust market sentiment. The benchmark contract of WTI crude oil rallied +2.06% and settled at 86.62. The contract reached an intra-day high of 86.90, the highest level since October, 2008. US non-farm payrolls increased +162K (consensus: +190K) in March while February's reading was revised -14K form -36K. Private payrolls surged +123K, the strongest gain since May 2007. Unemployment stayed at 9.7% but household employment increased for the 4rd consecutive month. Investors were excited as there are signs of improvement in the US job market. Added to it were upbeat ISM indices. Manufacturing index improved to 59.6 in March from 56.5 a month ago, while services index also added +2.4 points to 55.4, the highest since May 2006. Oil exporters start raising prices as they see demands are set to improve further. Saudi Aramco, the world's largest state-owned oil company, increased official selling prices for its Extra Light crude oil to customers in the US and Asia for May. Price will be 40 cents higher than April's. Going back to hard facts - oil inventory, US crude oil inventory has risen for 9 weeks and current level is +6.5% above 5-year average. Although stockpiles for oil products, such as gasoline and distillate, have dropped, they are still holding at very high levels. Gold strengthened despite firmness in USD. The benchmark contract gained +0.68% to 1133.8. Encouraging US data inevitably raised inflation fear and this helped gold. Others in the precious metal complex also soared. Silver rose +1.27% to 18.12 while platinum and palladium advanced +2.04% and +3.39%, respectively. Commitments of Traders: Crude Oil: Net speculative long positions resumed the uptrend and rose to 117.2K contracts last week as broad market sentiment was supported by economic data and relief in concerns over Greece's sovereign crisis. Net longs should surge in the coming week as crude oil broke above the upper boundary of recent trading range and surged to as high as 86.9 Natural Gas: Net short positions declined further to 177.9K contracts despite continuous price drop. Encouraging employment and manufacturing data in the US should help gas price, hence, reduction in net shorts in coming weeks Gold: Net speculative long positions dropped for a third week to 173.8K. Price recovered during the week but gains were limited due to the dollar's strength Silver: Net speculative long positions in silver rose to 33.0K after falling for the 2 weeks. After underperforming other precious metals, trading in silver started to pick up. Evidence of global economic recovery should boost price further Platinum: Net speculative long positions for platinum slid for the first time in 9 weeks. We believe the pullback is only temporary. Medium- to long-term outlook in platinum and palladium remains robust. Both fundamentals and investment demands bode well for both metals