Extending Friday's rally, crude oil surges above 80 dollar in Asian morning. Currently trading at 80.15, price is boosted by escalated tensions between Iran and western countries. While event risks may lift oil price higher in the near-term, fundamental outlook does not warrant current price level. Earthquake in Chile also triggers worries about production disruption in copper. However, gains in copper were pared after the miners said they might re-open the plants soon.

Brigadier-General Hossein Salami of Iran said on Sunday that the country may cut energy supplies to European countries if they support sanction against Iran. While the International Atomic Energy Agency and many countries believe Iran is going to develop nuclear weapon, the country denies it and says its nuclear program is for peaceful purpose only.

The US and Israel agree to extend sanctions against Iran but this will hardly be successful without the support from European countries. Iran is the world's fourth largest exporter of crude oil (second largest withn OPEC), it possesses around 16% of the world's natural gas and around half of the world's total energy supply. Salami threatened that if European leaders support sanctions, Iran may cut energy supply, letting the region to 'spend the winter in cold'.

Potential supply disruption boosted energy prices. However, with abundant spare capacity, the world can actually still survive for a year without oil supply from Iran. According to International Energy Agency (IEA), Iran produces 3.5 -4.0M bpd of oil...stocks could absorb a 3 -4M bpd supply gap for more than a year. There are mechanisms there for supply disruption, this could be a calming factor for markets'.

Copper price soared to a 5-week high as Chile's 8.8 magnitude earthquake on February 27 disrupts mine production. Chile is the world's largest copper producer, the earthquake forced 2 of the miners, Codelco and Anglo America, in the country to suspend mine operations. Closure of plants in these 2 companies indicates 16% of Chile's production will be affected. However, copper price pulls back as investors take profits and Codelco said that they are gradually restarting operations in some areas.

Gold price changes little in Asian session as the dollar pares its losses incurred last Friday. Greece's deficit issue remains in focus. In a meeting later today, the EU will likely force Greece to adopt more measures so as to reduce its sky-high budget deficits.

Commitments of Traders:

Crude Oil: Net speculative long positions rose for the second week to 85.4K contracts. Crude price surged above 80 level in the week as driven by improved market sentiment while fundamentals did not warrant such rally

Natural Gas: Net speculative short positions increased to 166.3K contracts. Gas price underperformed others in the energy complex as inventory level remained above normal during winter time. De-linkage between natural gas price and others in the energy complex might trigger coal gas substitution

Gold: Net speculative long positions surged to 200.6K last week. Although gold recovered after hitting bottom at 1044.5 in early February, price has stuck within a range in recent week. Sovereign risk in Greece, strength in USD and inflation outlook will continue to be key factors affecting gold's movement in the near future

Silver: In tandem with gold, net speculative long positions in silver rose to 27.8K. Sovereign crisis in peripheral European countries and global unwinding of previous stimulus measures remain overhangs on price outlook

Platinum: Net longs rebounded increased modestly to 20.3Kcontracts. Platinum's fundamental is strong as auto sector recovers after the crisis in 2008/09. Platinum price has rooms to advance higher and net speculative long positions should rise further