Commodities rebounded on Monday after the heavy selloff last week. The front-month contract for WTI crude oil prices climbed higher to 98/99 after tumbling to 94.63, almost a 3-month low, while the equivalent Brent crude contract recovered to 110/11 after a slump to as low as 105.15 last Friday. Buying interests emerged in silver as some market participants viewed that last week -30% selloff was excessive. Gold performed resiliently, rising for a second day and recapturing the 1500 territory. High uncertainty remains in this week. While non-payrolls in the US unexpectedly climbed, other indicators were rather weak. Investors will cautiously monitor the developments. Talks of Greece's exit from the euro dampened sentiment. Lingering sovereign debt crisis in the European periphery lent support to gold. China may announce tightening measures days before or after releases of April's macroeconomic statistics.
Concerns over sovereign crisis and debt restructuring intensified after Der Spiegel magazine said Greece may withdraw from the Eurozone. The news was denied by the EU which, however, announced to ease the terms of the 110B euro bailout offered to the country last year. Rumors said that officials may require Greece to provide collateral in exchange for additional bailout funds. More details will probably be given after the Eurogroup meeting on May 16. Ireland', the country that accepted an 85B euro funding from the EU and the IMF, is closely watching any change in Greece's terms. Minister for Communications Pat Rabbitte said it's hopeful' that Ireland could get a lower interest rate and that "quite frankly the rate on Ireland must be reduced'.
For the coming week, key macroeconomic events include BOE's quarterly inflation report, US' PPI and CPI data for April, as well as China's economic data for April.
Commitments of Traders:
Speculators were mixed towards the energy complex. Net length for crude oil futures plummeted to 244 326 contracts as prices slumped. Net lengths for heating oil and gasoline futures, however, increased to 29 310 contracts and 61 084 contracts respectively. Net short for natural gas futures fell to 187 800 contracts. It's the first time since mid-January that net short dropped below 200 contracts.
In the precious metal complex, net lengths for gold and silver futures were trimmed for a second consecutive week. The size of contraction was, however, reduced. PGMs recovered further with net lengths for platinum and palladium futures rose to 26 992 contracts and 11 797 contracts respectively.