Crude oil remained firm as the EIA/DOE report shows huge decline in inventory. The front-month WTI contract gained +0.94% while the Brent contract was up 0.76%. Refined oil product prices were mixed as both gasoline and distillate stockpile soared last week. Precious metals extended recent gains with the benchmark Comex gold and silver contracts rising +1.37% and +0.52% respectively. Weakness in US dollar was certainly a factor supporting commodity prices. The DXY index fell for a second consecutive day, plunging to a3-week low of 101.3 before settling at 101.52. EURUSD rebounded to a 1-week high of 1.0615 after plummeting to a 14-year low of 1.0339 earlier in the week. The single currency has been lifted by upside surprise in German CPI.
On oil inventory, the DOE/EIA reported that total crude oil and petroleum products stocks dropped -6.08 mmb to 1321.9 mmb in the week ended December 30. Crude stockpile declined -7.05 mmb to 479.01 mmb with PADD 3 contributed to almost all the withdrawal. Cushing stock added +1.07 mmb to 67.51 mmb while utilization rate added +1% to 92%. For refined oil products, gasoline inventory soared +8.31 mmb to 225.45 mmb as demand decreased -8.76% to 8.47M bpd. Production decreased -10.15% to 9.47M bpd while imports jumped +66.36% to 0.72M bpd during the week. Distillate inventory rose +10.05 mmb to 161.69 mmb as demand slumped -29.62% to 2.79M bpd. Production increased +7.51% to 5.33M bpd while imports plunged -36.94% to 0.1M bpd during the week.
On the dataflow, ADP estimated that US payrolls increased +153K in December, missing consensus of 175K and November's downwardly-revised 215K. Challenger estimated that the number of job cuts jumped +42.4% y/y in December, following a -13% decline in the prior month. Initial jobless claims surprisingly fell 235K in the week ended December 31, from a downwardly revised 263K a week ago. The market had anticipated a milder drop to 260K. the 4-week moving average dropped to 256.8K from 262.5K in the prior week. Continue claims increased modestly to 2.11M in the week ended December 23.
In the Eurozone, retail PMI rose +1.8 points to 50.4 in December. the bloc's inflation has shown signs of improving recently. PPI improved to +0.1% y/y in November, from -0.4% a month ago. Headline CPI accelerated to +1.1% y/y in December from +0.6% a month ago. Core CPI also picked up to +0.9% y/y from +0.8% in November. In Germany, headline CPI more than doubled to +1.7% y/y in December. This came in better than expectation of a rise to +1.4%. Improvement in Eurozone's inflation, especially in Germany, raised speculations of ECB rate hike. This has lifted euro over the past few days. However, we retain the view that ECB would maintain its dovish tapering stance.
Today, the focus is on US non-farm payrolls which probably increased another +178K in December. The unemployment rate might have edged higher to 4.7% due to the increase in participation rate. the average hourly earnings might have gained +0.3% m/m in December, after dropping -0.1%.