Daily Energy & Bullion Insight 2-Jun-2009

Research report by 'Ventura Securities Ltd'
     
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Oil fell below $68 a barrel on Tuesday as prices slipped from a sharp rally to a seven-month high in the previous day.

U.S. crude fell 88 cents to $67.70 a barrel by 5:30 a.m. EDT. On Monday, it closed at $68.58 after hitting $68.68, the highest settlement and intraday prices, respectively, since early November last year on back of Wall Street rallies.

The July futures added 3.4% to close at 68.58 as driven by encouraging economic data from the US, Euro zone and China. Currently trading at 68.4, near-term bullishness remains but is subject to pullback.

Following strong PMIs in China and Europe, US' ISM manufacturing rose to 42.8 in May, better than market expectation of 42 and 40.1 a month ago. Although a reading below 50 indicates contraction, it's the highest level since last September. Moreover, the new orders component increased for the first time since recession began, signaling economic contraction may end later this year.

   
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