Despite a rebound, oil trading is thin as investors remain cautious about economic outlook and oil demand. Currently trading at 76.2, WTI crude oil price continues hovering around the lowest level in a month. The market is awaiting a series of economic data from the US and API’s oil inventory report. Gold remains firm and soars for a 4th consecutive day. However, upside potential in the near-term may be limited as increase in investment demand may be offset by physical demand. Buyers who acquired gold at 1200 level may sell the metal for profits.

Oil inventory probably fell -1 mmb to a 1-month low in the week ended August 13 as driven by decline in imports. However, fuel stockpiles were mixed with gasoline sliding -0.22 mmb while distillate gaining +1.6 mmb. Fuel demand may have dropped further. For gasoline, as the US driving is approaching an end, it’s unlikely to see strong demand for the fuel. Distillate demand is closely linked to industrial production. With economic recovery moderating, it’s hard to get much good news from distillate consumption.

Hurricane news may have lent support to oil prices. The National Hurricane Centre said yesterday that a low-pressure area in the northern Gulf of Mexico has a 60% chance of turning into a tropical cyclone in the next 2 days. Yet, oil producers in the region have not yet shut down production facilities, suggesting the storm may not have real impact on oil supplies.

European stocks open higher as strong corporate earnings upstaged worries about economic recovery. Stoxx600 Index climbed +0.3% after closing flat yesterday. Calsberg raised its earnings forecasts while Wienerberg, the world’s largest brick maker, returned the profit on cost- cutting.

In the UK, headline inflation dropped -0.2% m/m in July, after climbing +0.1% a month ago. However, annual increase of +3.1% overshot BOE’s upper threshold of +3% for a 5th month. Core CPI, however, eased more than expectations to +2.6% y/y, from +3.1% in June. The BOE expects risks of inflation are to the upside as driven by the hike of sales tax to 20% in January 2011 from the current 17.5%.

US’ housing starts and housing permits for July probably showed small changes from the prior month. While the former might have climbed to 0.57M from 0.55M in June, the latter should stay around 0.58M. Industrial production is expected to have climbed +0.5% m/m in July, following a gain of +0.1% in June. Capacity utilization rate probably improved mildly to 74.5%, from 74.1%, during the month.