OPEC to Let Oil Quota-Busting Persist as Crude Exceeds $80

May 6 (Bloomberg) -- The Organization of Petroleum Exporting Countries will keep pumping beyond their quotas rather than alter official production targets after crude touched an 18-month high this week.

Oil has risen in the past few weeks because of expectations of global economic growth rather than a lack of crude supplies and the price gains may prove temporary, a Persian Gulf official familiar with OPEC policy said in a May 3 interview, on condition of anonymity. Crude traded in New York dropped as low as $78.87 today, from an intraday high of $87.15 on May 3.

OPEC agreed in March to uphold existing output quotas for a fifth time since 2008. Members are exceeding those allocations in response to prices that have averaged more than $80 a barrel this year. The group typically doesn’t alter official quotas unless it needs to signal that prices are too high or low, said Imad al-Atiqi, a member of Kuwait’s Supreme Petroleum Council.

“If there is any shortage of supply, then we will move,” otherwise “it would be a waste of time,” Qatari Oil Minister Abdullah bin Hamad al-Attiyah said in a May 4 interview in Doha. “Even if it’s $100 a barrel and it’s not related to shortage of supply then it will be very difficult.”

Oil prices were 82 percent higher in the first quarter compared with the same period last year, providing profits for Royal Dutch Shell Plc, PetroChina Co. and ConocoPhillips that were better than analysts forecast. Kuwait’s oil minister, Sheikh Ahmad al-Abdullah al-Sabah, said last month that $85 a barrel is “acceptable,” while his Saudi Arabian counterpart Ali al-Naimi said March 30 he “hopes” prices remain between $70 and $80.

Oil Price Forecasts

Al-Naimi and ministers from other Arab oil producing nations will gather in Doha, Qatar, for a May 9-12 conference hosted by the Organization of Arab Petroleum Exporting Countries, which includes seven of OPEC’s 12 members.

New York crude will average $81 a barrel this quarter and $80 this year, according to the median of more than 30 analyst forecasts compiled by Bloomberg. Crude traded above $80 during all of April and rallied above $87 on May 3 as U.S. manufacturing expanded in April at the fastest pace since 2004, signaling increasing fuel demand in the world’s biggest energy consumer. Oil subsequently retreated, trading at $79.60 a barrel at 9:12 a.m. London time today, as a strengthening dollar curbed the appeal of commodities.

OPEC is already pumping about 2 million barrels a day more than its quota allows, and ministers are wary of boosting supply even further on concerns that the global economic growth isn’t entrenched.

Market Message

Johannes Benigni, chief executive officer of consultants JBC Energy GmbH in Vienna, said OPEC would raise quotas to send a “communication” to the oil market only if prices become high enough to threaten the economic recovery.

“Members will start scratching their heads” if prices surpass $90 a barrel and would talk about it officially if prices were to go above $100, Kuwait’s al-Atiqi said in a May 4 interview. He expects prices to remain below $85 a barrel this year and also in 2011.

“There will be no need for the time being to consider anything, no need to revisit anything” until the next OPEC meeting in October, Shokri Ghanem, Libya’s top oil official, said in an interview from Tripoli on May 4. “The trend is not established yet, we can’t look at it when it’s been going up and down for two or three weeks.”

Inventories Gain

Crude oil inventories in the U.S. have gained 9.6 percent over the past three months to 360.6 million barrels, the highest since June 2009, according to government data.

Demand in China, the second-largest energy consumer, may be curbed as policy makers take measures to contain inflation. Manufacturing growth slowed in April, according to a May 4 report from HSBC Holdings Plc and Markit Economics. The Chinese government on May 2 ordered banks to hold more of their assets as reserves for the third time this year.

OPEC cut quotas to the current level of 24.845 million barrels a day at the end of 2008 after fuel demand fell during the worst recession since World War II and prices slumped from a record $147 a barrel in July 2008 to $32 in December that year.

The group, which supplies 40 percent of the world’s oil, will need to pump less than previously thought this year as production from outside the group increases more than forecast, according to separate monthly analysis reports from OPEC’s own secretariat and the International Energy Agency.

Members will need to produce 28.81 million barrels of crude a day to satisfy demand for the year, OPEC said in its April 14 report, versus actual March production of 29.26 million.

Flouting Quotas

The 11 members with quotas have all flouted their national limits as prices recovered. They pumped 26.88 million barrels of crude a day in April, according to Bloomberg estimates, which means they completed only 52 percent of their earlier pledge to cut output by 4.2 million barrels a day. Iraq has no quota.

“Oil hasn’t moved with any great momentum outside the range that officials say they are comfortable with,” said London-based Paul Horsnell, head of commodities research at Barclays Capital. “You’ve got to look at the fundamentals -- there’s no point in reacting with quantities if you don’t think the addition will justify the supply-demand balance.”

Among analysts whose forecasts are higher than the median is Francisco Blanch, head of commodities research at Merrill Lynch. Prices will average $92 a barrel in the second half and are likely to exceed $100 a barrel sometime later this year or in early 2011, Blanch said on April 26.

OPEC’s members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. The group’s next meeting is scheduled for Oct. 14.

Crude Oil May Slide to $60 After Biggest Decline in 15 Months

May 7 (Bloomberg) -- Crude oil may fall to $60 a barrel in New York after the biggest three-day plunge in almost 15 months, while investors fleeing riskier assets pushed gold up toward a record.

Crude sank and gold surged yesterday as the Dow Jones Industrial Average had its biggest intraday loss since the market crash of 1987. The euro slid to a 14-month low and yields on Greek, Spanish and Italian bonds rallied on concern that European leaders aren’t doing enough to stem the region’s debt crisis. Gold futures reached $1,211.90 an ounce at 3:29 p.m. in New York, about $16 below the record on Dec. 3.

An 11 percent drop has brought the front-month crude contract on the New York Mercantile Exchange down to its 200-day moving average at $76.37 a barrel. If prices fall below support at $75, “it could spark a $15 decline,” according to technical analysis by Jim Stellakis, an independent analyst.

“The oil market is being hit by a double whammy,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant. “The rise in the dollar is pummeling crude. Also, there are global growth concerns which have increased because of the credit downgrades in Europe and the Greek debt crisis.”

Crude oil for June delivery dropped $2.86, or 3.6 percent, to settle at $77.11 a barrel yesterday on the Nymex. Oil touched $74.58, the lowest level since Feb. 16, at 2:45 p.m. as stocks plunged.

Euro Sinks

The euro dropped 1.5 percent to $1.262. The common currency touched $1.2529, sliding below $1.26 for the first time since March 2009.

“The ECB can fix this instantly by doing what the Fed has done -- instantly providing liquidity by buying bad fixed-income instruments and paying cash in U.S. dollars,” said David Kovacs, head of quantitative strategies at Turner Investment Partners in Berwyn, Pennsylvania, which manages $18 billion. “The reason the market is horrified now is Trichet said it’s not even being discussed. Smart investors are basically selling risk assets.”

A 110 billion-euro ($140 billion) aid package to avoid a default by Greece has failed to prevent bond yields from rising, driving up borrowing costs for countries including Spain and Portugal.

‘Capitulation’

“This is a classic capitulation day,” said Kevin Davitt, a senior market strategist at LaSalle Futures Group in Chicago. “There is a pervasive fear and movement into gold as a safe haven.”

The Dow Jones Industrial Average plunged almost 1,000 points before trimming its drop and ended down 347.80 points, or 3.2 percent, at 10,520.32. About $700 billion of U.S. stock- market value was wiped out in less than 10 minutes, according to data compiled by Bloomberg.

The Standard & Poor’s 500 Index fell as much as 8.6 percent before closing down 3.2 percent at 1,128.15. It was the biggest percentage drop on a closing basis since April 20, 2009, for both measures.

“It’s panic selling,” said Burt White, chief investment officer at LPL Financial in Boston, which oversees $379 billion. “There’s concern that the European situation might cool down global growth and freeze the credit markets.”

New York Stock Exchange spokesman Rich Adamonis said “there were a number of erroneous trades” during the plunge. Nasdaq OMX Group Inc. said it will cancel stock trades on all exchanges that were more than 60 percent above or below prices at 2:40 p.m. New York time.

SEC, CFTC Review

The Securities and Exchange Commission and the Commodities Futures Trading Commission said in a statement they are “working closely with the other financial regulators, as well as the exchanges, to review the unusual trading activity that took place briefly this afternoon.”

Standard & Poor’s last month downgraded Greece’s debt to junk and followed with cuts to Portugal and Spain. Europe’s fiscal crisis could threaten banks in Portugal, Spain, Italy, Ireland and the U.K., Moody’s Investors Service said in a report published today.

“There’s a bearish contagion that’s spreading from Greece to other countries,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “We’re getting a broad-based drop in many markets. The European debt crisis is puncturing expectations of near-term tightening of the oil market.”

Commodities Drop

The Reuters/Jefferies CRB Index of 19 commodities declined 1.9 percent to 262.76, the lowest level since Feb. 8.

“There are two reasons for the drop in oil prices,” Adam Sieminski, Deutsche Bank AG’s chief energy economist, said by phone from Washington. “The likelihood of an unswerving rise in the global economy has been shaken by events in Greece. The Saudis have told us time and time again that a price near $80 was appropriate while the economy is in a recovery phase.”

Saudi Arabian Oil Minister Ali al-Naimi said last month that prices in the $70-to-$80 range are “as close to perfect as possible” and that he hoped oil would remain in that range. King Abdullah has targeted $75 oil as a fair price for consumers and producers.

U.S. stockpiles of crude oil rose 2.76 million barrels last week to the highest level since June, an Energy Department report showed. It was the 13th gain in 14 weeks. Crude oil Inventories at Cushing, Oklahoma, where the New York-traded West Texas Intermediate grade is stored, rose 4.9 percent to 36.2 million barrels, the highest level since the department began reporting on supplies at the hub in April 2004.

Yen Drops on Bets Yesterday’s Risk-Aversion Surge Was Overdone

May 7 (Bloomberg) -- The yen weakened against most of its major counterparts on bets risk aversion that drove a surge in Japan’s currency was overdone.

The yen fell against 15 of its 16 most-traded counterparts. The euro is set to rally after it sank more than 5 percent below its 21-day moving average versus the dollar, according to online currency trading company Ueda Harlow Ltd.

“Currencies such as the yen have undergone sharp moves, so we’re likely to see a correction of that,” said Yuji Saito, director of the foreign-exchange department at Credit Agricole Corporate and Investment Bank in Tokyo. “The markets are prone to choppiness.”

The yen weakened to 91.11 versus the dollar as of 9:22 a.m. in Tokyo from 90.58 in New York yesterday, when it jumped as much as 6.2 percent. Japan’s currency was at 114.93 per euro from 114.32 yesterday and as strong as 110.70.

The euro-yen currency pair “normally moves within a 3 percent range from its 21-day moving average,” said Toshiya Yamauchi, a senior foreign-exchange analyst at Ueda Harlow in Tokyo. “This will make the euro eligible for a short-term rebound.”

The euro’s 14-day relative strength index against the yen, a comparison of magnitudes of gains and losses, was 28.4 today, below the 30 threshold that indicates the currency may have fallen too quickly and is poised to strengthen.

FCPO Daily Commentary for 7th May 2010

FCPO 3rd month July futures contract traded RM7 lower to close at RM2523 levels as compare to previous trading sessions with a total of 14,033 lots traded in the market. FCPO price was traded wild during trading session despite crude oil and soybean oil were traded lower during the electronic trading sessions.
FCPO price reached support levels at 61.8% Fibonacci support levels at RM2509 regions before attempt to penetrate previous high at RM2544 regions. Technically, FCPO seems provided further affirm information that FCPO price seems would likely trading higher in the coming trading sessions provided support levels at RM2500 and RM2482 were not violated in the coming trading sessions. However, FCPO price would only further affirm on bull trend provided trading price must be able to hold above resistance levels at RM2544 and RM2564 regions.

FKLI Daily Commentary for 7th May 2010

FKLI Apr Futures contract traded 2.5 points lower to close at 1329.5 levels as compare to previous trading session to with a total of 9,046 lots traded in the market. FKLI was traded wild as it reach for high and low of intraday price range while regional indices and Dow Jones futures electronic trading were settle lower upon end of trading sessions.
FKLI complete minor wave 5 upsurges at 1334.5 region; 78.6% Fibonacci resistance levels, before manage to correct lower to support levels at 1323.5 regions; 78.6% Fibonacci support levels. Technically, FKLI seems temporary holding above support levels at 1323.5 and 1320 regions. Any violation of the support levels would suggest heavy liquidation of long position while FKLI expected to encounter some degree of resistance around 1336 and 1340 region; both were 50% and 61.8% Fibonacci resistance levels. Presume FKLI still riding on uptrend, these resistance levels should not become difficulties to prevent price from trading higher.

Crude Oil Extends Declines as Dollar Strengthens, Supplies Rise

May 6 (Bloomberg) -- Crude oil declined for a third day after the dollar strengthened against the euro, curbing the appeal of commodities to investors, and U.S. inventories increased more than expected as imports rose.

Oil dropped 3.3 percent yesterday as the common currency tumbled to its lowest level against the dollar since March 2009 on concern that Greece’s bailout may have to be extended to other indebted nations. U.S. crude stockpiles rose 2.76 million barrels last week to the highest level since June, an Energy Department report showed. Inventories were forecast to rise 1 million barrels, according to a Bloomberg News survey.

“The Greek crisis appears to be spreading, which is raising concerns about the economic recovery,” said Phil Flynn, vice president of research at PFGBest in Chicago. “Prices have been supported on expectations that demand will climb as economies rebound. Now the focus may return to the market fundamentals and the huge oversupply of oil.”

Crude oil for June delivery dropped as much as 41 cents, or 0.5 percent, to $79.56 a barrel and was at $79.75 in electronic trading on the New York Mercantile Exchange at 8:25 a.m. Sydney time. Yesterday, the contract fell $2.77 to $79.97, the lowest settlement since March 15.

European Central Bank council member Axel Weber said yesterday there is a threat of “grave contagion effects” in the euro area. The dollar traded little changed at $1.2811 a euro at 8:28 a.m. Sydney time, after rising 1.4 percent yesterday. The euro touched $1.2789, the weakest level since March 12, 2009.

Rising Imports

Imports of crude oil climbed 2.8 percent to 9.95 million barrels a day, the highest level since the week ended July 24, the department’s report yesterday showed. Fuel imports surged 9.9 percent to 3.1 million barrels a day, the highest level since the week ended Feb. 5.

Inventories of crude oil at Cushing, Oklahoma, where the New York-traded West Texas Intermediate oil grade is stored, rose 4.9 percent to 36.2 million barrels, the highest level since the department began reporting on supplies at the hub in April 2004.

Refineries operated at 89.6 percent of capacity, up 0.7 percentage point from the prior week and the highest level since May 2008, according to the Energy Department report.

Brent oil for June settlement declined $3.06, or 3.6 percent, to end the session at $82.61 a barrel on the London- based ICE Futures Europe exchange yesterday.

Soybean Futures Fall on Concern Greek Debt Crisis May Spread

May 5 (Bloomberg) -- Soybeans fell on concern that the Greek debt crisis will spread in Europe, undermining the global economic recovery and reducing commodity demand.

The Reuters/Jefferies CRB Index of 19 raw materials declined, heading for the biggest-two day drop since February. The euro plunged to a 14-month low against the dollar, and global equities slumped. European Central Bank council member Axel Weber said Greece’s fiscal crisis is threatening “grave contagion effects” in the region.

“The Greek situation has pushed the dollar higher than people expected, and that brought out selling by speculators,” said Gregg Hunt, a market analyst at Fox Investments in Chicago. “It all boils down to uncertainty about the final impact that the European debt crisis will have” on the global recovery, he said.

Soybean futures for July delivery dropped 9 cents, or 0.9 percent, to $9.78 a bushel on the Chicago Board of Trade. Yesterday, the price touched $9.74, the lowest level for a most- active contract since April 15. The oilseed has dropped 6.7 percent this year.

Soybeans are the second-biggest U.S. crop, valued at $31.8 billion last year, behind corn at $48.6 billion, government figures show.

FCPO Daily Commentary for 6th May 2010

FCPO July Futures contract traded RM15 higher as compare to previous trading sessions to close at RM2530 with a total of 12,945 lots traded in the market. FCPO price seems rebound firm after opened lower due to weak soybean oil and crude oil overnight settlement.
FCPO price rebounded higher towards RM2545, 78.6% Fibonacci support levels after opened and traded below RM2500 psychology levels. FCPO price seems gets clearer on the current wave count as possible wave count gets reduce steadily. Technically, FCPO price seems tighten up with nearer support and resistance levels that crucial on short term trading direction. FCPO resistance levels seen at RM2564 and RM2581 are crucial for uptrend confirmation while support levels at RM2480 and RM2455 regions seen as crucial support levels for downtrend affirmation for medium term.

FKLI Daily Commentary for 6th May 2010

FKLI May Futures contract was traded 6.5 points lower as compare to previous trading session to close at 1338.5 levels with a total of 11,996 lots traded in the market. FKLI plunge lower due to Greece debt issue that view might be trigger off financial institution structure once again after the Subprime issue 2 years ago.
FKLI opened and plunge lower since open for trading and tested support trend line in the hourly price chart before FKLI starts to rebound higher towards 1331 regions. Technically, FKLI seems rather distracting as wave 2 might seems reach 100% Fibonacci support levels at 1321 regions while larger wave count suggest wave 4 complete at 1319.5 regions; 50% Fibonacci support levels. However, it’s crucial the nearest support levels at 1320 and 1312 regions; 50% and 61.8% Fibonacci support levels, were not violated in the coming trading sessions in order to affirm FKLI remain intact on uptrend while resistance levels seen at 1337 and 1346; both were 50% and 78.6% Fibonacci resistance level from 1352.5 to 1321.

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Oil Extends Decline as Dollar Surges, China Manufacturing Slows

May 5 (Bloomberg) -- Crude oil dropped for a second day after the dollar strengthened against the euro, curbing the appeal of commodities to investors, and a slowdown in Chinese manufacturing sent global equities lower.

Oil fell after declining the most in three months yesterday as the dollar rose on concern the Greek debt crisis will spread. A Chinese purchasing managers’ index dropped to a six-month low. Futures also decreased as an American Petroleum Institute report showed U.S. crude inventories gained 2.95 million barrels last week.

“The major concern at the moment is the manufacturing in China slowing down and the contagion from Greece spreading,” said Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney.

Crude oil for June delivery fell 57 cents, or 0.7 percent, to $82.17 a barrel, in electronic trading on the New York Mercantile Exchange at 10:08 a.m. Sydney time. Yesterday, the contract dropped $3.45, or 4 percent, to $82.74, the lowest settlement since April 27. It was the biggest single-session drop since Feb. 4

The dollar traded little changed at $1.2985 a euro at 10:09 a.m. Sydney time, after rising 1.6 percent yesterday. The Standard & Poor’s 500 Index fell 2.4 percent to 1,173.60, the most since February.

A purchasing managers’ index for China released yesterday by HSBC Holdings Plc declined to 55.4 from 57 in March, signaling government attempts to cool the world’s second-biggest energy consuming country are working.

Crude Supplies

An Energy Department report today will probably show that U.S. stockpiles of crude oil rose 1 million barrels in the seven days ended April 30, based on the median of estimates from 16 analysts surveyed by Bloomberg News.

The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.

Gasoline supplies rose 1.46 million barrels last week, according to the API report. Stockpiles of distillate fuel, a category that includes heating oil and diesel, increased 1.37 million barrels.

Brent oil for June settlement dropped 32 cents, or 0.4 percent, to $85.35 a barrel, on the London-based ICE Futures Europe exchange at 10:08 a.m. Sydney time. Yesterday, the contract declined $3.27, or 3.7 percent, to $85.67.

FCPO Daily Commentary for 5th May 2010

FCPO July Futures contract traded RM39 lower as compare to previous trading sessions to close at RM2515 with a total of 6,330 lots traded in the market. FCPO price was traded lower during trading sessions as crude oil and soybean oil were trade lower during electronic trading sessions despite standing firm during overnight settlement.
FCPO price plunge after manage to penetrate previous support levels at RM2547 and RM2537; 38.2% and 61.8% Fibonacci support levels. Technically, FCPO price still seems slightly unclear on the medium term direction as there are multiple possibilities on the Elliott Wave count. However, FCPO price would seems bearish on short term trading were next nearest support levels were seen at RM2503 and RM2482 regions; 61.8% and 78.6% Fibonacci support levels. FCPO price would further affirm bullish provided traded price was able to stand above resistance levels at RM2554 and RM2565 regions.

FKLI Daily Commentary for 5th May 2010

FKLI May Futures contract was traded 5 points lower as compare to previous trading session to close at 1338.5 levels with a total of 5,495 lots traded in the market. FKLI plunge lower despite were opened higher during morning sessions as Dow Jones was traded firm overnight but Dow Jones futures electronic trading was traded weak during trading sessions.
FKLI was traded lower after fail to penetrate resistance levels at 1353; 178.6% Fibonacci resistance levels and began to retrace lower towards support levels at 1340 and 1337.5 regions; 50% and 61.8% Fibonacci support levels. Technically, FKLI seems rather confusing in term of wave as there major 2 types of counts where support levels 1337.5 and 1328 regions seems critical element to decide if FKLI to remain intact Uptrend or otherwise. However, resistance levels at 1344 and 1348 seems critical in order further affirm FKLI riding on uptrend provided support levels were not violated.

Oil Drops Below $86 a Barrel After Forecast U.S. Supply Gain

May 4 (Bloomberg) -- Crude oil traded below $86 a barrel in New York as analysts forecast that U.S. crude supplies increased, signaling fuel demand in the world’s biggest energy user may be slow to recover.

Oil declined for the first time in five days after analysts predicted an Energy Department report tomorrow may show U.S. crude supplies rose for the 13th time in 14 weeks as imports climbed. Inventories probably increased 1.7 million barrels in the seven days ended April 30 from 357.8 million the week before, according to the median of nine analyst estimates.

“I don’t think this is a fair value for crude at the moment given the fundamentals,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “Crude stocks are very high.”

Crude oil for June delivery dropped as much as 27 cents, or 0.3 percent, to $85.92 a barrel and was at $85.98 in electronic trading on the New York Mercantile Exchange at 9:33 a.m. Sydney time. Yesterday, the contract gained rose 4 cents to $86.19 on the New York Mercantile Exchange.

Oil rose as much $1 a barrel yesterday after the Institute for Supply Management’s factory index increased to 60.4, the highest level since June 2004. Economists projected a gain to 60, according to a Bloomberg News survey. Europe’s manufacturing industry expanded at the fastest pace in almost four years in April as companies increased production to meet export orders, London-based Markit Economics said yesterday.

Brent crude for June settlement climbed $1.50, or 1.7 percent, to end the session at $88.94 a barrel on the ICE Futures Europe exchange in London yesterday.

Gold Trades Near Five-Month High on Europe, Currency Concern

May 4 (Bloomberg) -- Gold traded near a five-month high in Asia as sovereign debt risks in Europe and volatile currencies led investors to the safety of bullion.

Gold for immediate delivery rose $1.13 to $1,183.30 an ounce at 8:18 a.m. in Sydney. The metal reached a peak of $1,187.80 yesterday, the highest intraday level since Dec. 4, before falling as the dollar jumped on a report showing stronger-than-expected manufacturing growth in the U.S.

Futures for June delivery advanced 60 cents to $1,183.90 an ounce on the Comex in New York. The contract rose 0.2 percent to settle at $1,183.30 yesterday.

Platinum for immediate delivery added $2.50 to $1,725.50 an ounce after declining as much as 1 percent yesterday after the dollar rose and April sales by carmakers including General Motors Co. and Ford Motor Co. missed analysts’ estimates.

Silver was little changed at $18.81 an ounce after rising as much as 1.2 percent to $18.865 an ounce yesterday, its highest since Jan. 11. Palladium rose 0.7 percent to $545 an ounce after falling 1.3 percent yesterday.

Yen Falls as Global Economic Recovery Signs Spur Yield Demand

May 4 (Bloomberg) -- The yen fell against most higher- yielding currencies as signs the global economic recovery is gathering momentum boosted demand for riskier investments.

Japan’s currency weakened versus 14 of its 16 major counterparts before a U.S. report that may show pending home sales gained for a second month and a U.K. report forecast to show manufacturing grew in April. Australia’s dollar advanced toward its highest level in 19 months against the yen on speculation the nation’s central bank will raise interest rates.

“There’s every reason to believe that growth prospects will be very good,” said Adam Carr, a senior economist at ICAP Australia Ltd. in Sydney. “The mood is for risk taking, and we’ll see a drop in the yen.”

The yen fell to 124.80 per euro at 8:51 a.m. in Tokyo from 124.74 in New York yesterday. It was at 94.60 per dollar from 94.54. The yen slid to 87.63 versus the Australian dollar from 87.54, after reaching 88.06 on April 30, the weakest level since September 2008. The euro fetched $1.3191 from $1.3195.

The Dow Jones Industrial Average rose the most since February after a report showed U.S. manufacturing expanded in April at the fastest pace since June 2004. The number of contracts to buy previously owned homes rose 5 percent in March, a Bloomberg News survey showed before the report today.

A gauge of U.K. manufacturing based on a survey of companies climbed to 57.5 in April from 57.2 in March, a separate Bloomberg survey showed. The report will be released today in London.

RBA Meeting

Australia’s dollar advanced for a second day against the yen on speculation the Reserve Bank of Australia will today raise interest rates for a sixth time in seven meetings.

The RBA will boost the overnight rate target to 4.5 percent, according to 18 of 24 economists surveyed by Bloomberg.

“We are leaning toward a 25 basis point hike this afternoon given inflation is ticking up toward the high-end of the RBA’s band,” said Ian Fowler, senior corporate foreign exchange dealer at OzForex Ltd. in Sydney. “We may see Aussie continue to be supported and move higher against the yen.”

Benchmark interest rates of 4.25 percent in Australia and 2.50 percent in New Zealand compare with 0.1 percent in Japan, making the South Pacific nations’ assets attractive to investors seeking higher returns. The risk in such trades is that currency market moves will erase profits.

FCPO Daily Commentary for 3rd May 2010

FCPO 3rd month July futures contract traded RM4 lower to close at RM2554 levels as compare to previous trading sessions with a total of 5,879 lots traded in the market. FCPO price consolidate till the end of trading sessions as crude oil and soybean oil were traded mix during overnight and electronic trading sessions.
FCPO price opened reach new high at RM2565 after opened lower at RM2542 levels but consolidate since after 2nd trading sessions. Technically, FCPO price temporary supported above RM2548 regions; 38.2% Fibonacci support levels, and FCPO price trading would resume uptrend rally provided price manage to penetrate resistance levels at RM2560 and RM2584 regions. However, it’s very crucial for FCPO price to remain uptrend provided support levels at RM2520 and RM2480 were not violated in the coming trading sessions. Short term support seen at RM2542 and RM2530 regions; 50% and 78.6% Fibonacci support levels.

FKLI Daily Commentary for 3rd May 2010

FKLI Apr Futures contract traded 4 points lower to close at 1343.5 levels as compare to previous trading session to with a total of 3,790 lots traded in the market. FKLI was traded within tight range despite Dow Jones and regional indices were traded lower during trading sessions.
FKLI seems consolidate within range from 1343 and 1346 throughout entire trading sessions despite there was a false break towards 1348 levels during early of trading sessions. Technically, FKLI seems temporary topped around 1346 and 1350.5 resistance levels; 123.6% and 138.2% Fibonacci resistance levels. However, FKLI would assume still remain uptrend provided support levels at 1340 and 1328 were not violated in the coming trading sessions.

Crude Oil Rallies to Three-Week High on Demand Outlook, Dollar

May 3 (Bloomberg) -- Crude oil gained to a three-week high on speculation global demand will increase as the world economy recovers from recession.

A report today in the U.S., the world’s largest energy consumer, will probably show manufacturing expanded at its fastest pace in five years last month, according to a survey of economists. Oil also rose as the dollar extended its decline against the euro after policy makers agreed a 110 billion euro ($146 billion) rescue package for Greece.

“We’ve seen a string of pretty encouraging data from the U.S. and also Europe last week,” said Toby Hassall, commodity researcher at CWA Global Markets Pty in Sydney. “Despite the ongoing concern about the financial markets, the real economies around the world do seem to be on the mend.”

Crude oil for June delivery rose as much as 64 cents, or 0.7 percent, to $86.79 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $86.72 at 7:58 a.m. in Singapore.

The contract rose 1.2 percent to $86.15 on April 30, the highest settlement since April 6, as the dollar weakened and a Commerce Department report showed the U.S. economy expanded at a 3.2 percent rate in the first quarter.

Brent crude for June settlement rose 34 cents, or 0.4 percent, to $87.78 a barrel on the London-based ICE Futures Europe exchange, the highest since Oct. 7, 2008.

Growing Confidence

New York oil futures reached a 17-month high of $87.09 on April 6 and have gained 13 percent the past three months as gains on world equity markets boosted investor confidence.

The dollar slipped to $1.3321 per euro in early Asian trading, from $1.3294 in New York on April 30. A weaker dollar increases the investment appeal of commodities priced in the currency.

The rescue package for Greece has mixed impacts for oil and commodities, Hassall said.

“It probably drives some of the flight-to-quality interest out of the U.S. dollar, so I guess it undermines the dollar,” he said. “It also provides a bit more hope that the European economic recovery will remain on track.”

Hedge-fund managers and other large speculators reduced their bets on rising oil prices last week, according to U.S. Commodity Futures Trading Commission data.

Oil Spill

Speculative net-long positions, the difference between orders to buy and sell the commodity, fell 10 percent to 109,264 contracts on the New York at April 27, the commission said last week.

The risk of shipping delays because of the growing oil slick in the Gulf of Mexico is probably not influencing oil prices yet, Hassall said.

Oil from the April 20 blast and fire at a BP Plc deep water well in the Gulf has reached the Louisiana coast, and more is expected within two days, State Governor Bobby Jindal said yesterday.

The Louisiana Offshore Oil Port handles about 10 percent of the nation’s imports. All operations are normal, Barb Hestermann, a spokeswoman for the LOOP, said yesterday.

“We don’t anticipate being impacted,” Hestermann said. “We’re quite a bit west of the oil spill.”