Crude oil prices remained firm as the markets reopened after holiday. The front-month WTI crude oil rose for a 7th consecutive day, gaining +1.66% on Tuesday and +5.77% over the past week, and settled at 53.9, the highest close since July 2015. The Brent crude contract also gained +1.69% to settle at 56.06 for the day. Precious metals also climbed higher as US dollar consolidated. The benchmark Comex gold contract added +0.48% while silver rose +1.43%. For PGMs, the Nymex platinum and palladium contracts was up +1.22% and +2.89% respectively. Japanese yen weakened as the dataflow for November was disappointing.
Japan's core CPI contracted -0.4% y/y in November, same as October but missed consensus of -0.3%. Worse still, the core CPI deflation for Tokyo deteriorated to -0.6% y/y in December, compared with consensus of, and November's, -0.4%. On the job market, the unemployment rate surprisingly edged +0.1 percentage point higher to 3.1% in November. Fatigue in the job market hurt consumption, resulting in a -1.5% y/y contraction in household spending for November, compared with expectations of a +0.2% growth and October's -0.4% drop. Retail trade, however, gained +1.7% y/y, beating consensus of +0.9% and the downwardly revised -0.2% drop in October. Japan's housing starts grew +6.7% y/y in November, weaker than +9.6% y/y as expected and +13.7% in October. Industrial production expanded +1.5% m/m in November, better than the flat reading previously but worse than consensus of a +1.8% growth.
We have a light calendar for the short week and ahead of another short week. US pending home sales, due Wednesday, probably gained +0.6% m/m in November, after adding +0.1% in the prior month. Due on Thursday, advanced goods trade deficit probably narrowed to US$61.5B in November from US$61.9B a month ago. Initial jobless claims might have increased +2K to 277K in the week ended December 24. Friday comes the Chicago PMI which probably added +0.2 point to 57.8 in December.
Commitments of Traders:
Speculators were mixed over the energy complex in the week ended December 20. Net LENGTH for crude oil futures rose +13 894 contracts from a week ago to 436 661. Meanwhile, net LENGTH of heating oil fell -7 648 contracts to 41 935 and net LENGTH for gasoline dropped -1 132 contracts to 60 597.Natural gas drifted to net LENGTH of 120 contracts, first time since 2007.
With the exception of platinum, speculators were bearish over the precious metal complex last week. Net LENGTH for gold futures declined -14 477 contract to 114 834 while that for silver futures fell -6 039 contracts to 60 894. For PGMs, net LENGTH for platinum increased +625 contracts to 26 268 while that for palladium dropped -102 contracts to 15 037.