China February Inflation Steadies, Factory Output Jumps

China's headline consumer price inflation steadied at 4.9 percent in the year to February, the same as January, the National Bureau of Statistics (NBS) said on Friday.

China's industrial output in the first two months of 2011 rose 14.1 percent year-on-year from a 13.5 percent pace in December. 

Economists polled by Reuters had forecast a 4.7 percent rise  in the consumer price index and a 13.3 percent rise in industrial output. 

The consumer price index (CPI) rose 1.2 percent in February from the previous month, after a 1.0 percent month-on-month rise in January. This figure was not seasonally adjusted.

Giving a more detailed breakdown of CPI, the NBS said food  prices rose 11.0 percent in the year to February, with non-food prices up 2.3 percent.

In month-on-month terms, food prices rose 3.7 percent, while non-food prices were up 0.1 percent.

The producer price index rose 7.2 percent in the year to February and was up 0.8 percent month on month.

Friday Look Ahead: Traders Watch Saudi Arabia & Economic Reports

Markets head into Friday watching and waiting to see if economic news outweighs geopolitical concerns, after Thursday's "risk off" selling spree.

Stocks and commodities tanked Thursday on fears of a global slowdown, after China reported a surprise $7.3 billion trade deficit and Spain's debt was downgraded by Moody's.  Oil was also a factor, falling hard early in the day, but regaining some lost ground after reports of a clash between police and protesters in the eastern region of Saudi Arabia.

The Dow [.DJIA  11984.61    -228.48  (-1.87%)   ] fell 1.9 percent to 11,984, its worst day since August 11. The Nasdaq was off 1.8 percent at 2701, and the S&P 500 skidded 1.9 percent to 1295, below the important 1300 level.

Oil finished lower, down 1.6 percent at $102.70, after sinking below $101 earlier in the day. Reports that police fired on protesters in the eastern Saudi city of Qatif sent crude above $103 temporarily.
"I think the market was calculating in a quiet end of the week and that nothing would come of the 'day of rage' in Saudi Arabia. We were on notice for it but given what the Saudis have been doing so far and seemingly getting the clerical community on board, it didn't seem like it would be a factor," said John Kilduff of Again Capital.

U.S. officials told NBC News that Saudis intentionally used only "less than lethal" force to disperse the protesters in Qatif, home to a Shiite minority. Activists have been reported to have called for mass protests against the Kingdom's absolute monarch Friday, but it is not expected that those protests will be major. Protests are planned in other areas of the Gulf, including Yemen and Bahrain after Friday prayers, but the markets will be watching to see what happens in Saudi Arabia, the world's largest oil producer and viewed as much more stable.

"The stakes just went up in a big way. Even if this was a minor incident, it was a jarring reminder of what could happen there," said Kilduff, a CNBC contributor.

Oil has been a wild card for markets, and its rise above $100 has pressured stocks for fear it could snuff the economic recovery. Many traders believe if the unrest is contained, and Saudi is not a factor, the rise in oil could be temporary. Traders have also been expecting to see the S&P break down under the 1300 level, and now the debate is whether there is a new lower marker it is shooting for.

"The headlines have been fairly dire and we've bought the dips. I don't think we break from that dramatically without some sort of major catalyst," said one stock trader. "I didn't see anything today that was the last straw."

There is a stream of economic data Friday, starting with overnight inflation data from China. In the U.S., retail sales are reported at 8:30 a.m. and consumer sentiment is at 9:55 a.m. Both numbers could show the impact of higher gasoline prices on consumer spending and attitudes. Retail sales are expected to be up 1.2 percent, and 0.7 percent, excluding autos. Business inventories are released at 10 a.m.

European leaders also meet in Brussels for an extraordinary summit ahead of their late March meetings where they are expected to agree on how to deal with future bailouts. The leaders Friday are expected to work out a framework for a "competitiveness pact,"  which would include new mechanisms of fiscal discipline.

"No final decisions will be made until the March 24-25 summit," said Marc Chandler, chief currency strategist at Brown Brothers Harriman. "They'll say they're making progress toward an agreement ahead of the summit." Chandler said any news from the summit will not be until late in the New York afternoon, and is not likely to be much of a factor for the euro.

The dollar was a winner in Thursday's market sell off, gaining 0.8 percent against the euro in a flight-to-safety trade. The euro was at 1.3789.

Chandler said he is watching China's data and also the potential for a rate hike, following rate moves by Korea and Thailand. "The rise in market rates, like the 7-day repo rate in China, suggests it could be close to raising rates. It's been rising for two days now and some other swap rates have risen," he said. He added that rumors of this sort typically come up ahead of weekends, but it is unlikely China would raise rates while the National Party Congress is underway, and it may wait until next weekend.

US, Brent Crude End Lower as Markets Digest Saudi Unrest

Brent and U.S. crude oil futures settled lower in volatile trade Thursday, as crude markets were beset by deeper geopolitical concerns after witnesses reported that police fired upon protesters in Saudi Arabia's Eastern province.

Crude prices pulled off session lows as jittery markets reacted to yet another instance of unrest in the Arab world. However, oil prices slipped back on word that the unrest was driven by protesters in the eastern city of Qatif, home to a Shiite minority.

U.S. officials told NBC News that Saudi police intentionally dispersed protesters with "less than lethal" force.

Earlier, a witness told Reuters that police lobbed percussion bombs to disperse a crowd of about 200 people belonging to the kingdom's Shi'ite minority. 

Earlier reports also said activists have made unprecedented calls for mass protests against the kingdon's absolute monarchy on Friday. Protests are also planned in other Gulf countries such as Yemen, Kuwait and Bahrain on Friday, after the day's religious prayers. 

In London, Brent crude [LCOCV1  115.50    0.07  (+0.06%)   ] fell 51 cents to settle at $115.43 a barrel, in trading between $113.52 and $116.55.

On the New York Mercantile Exchange, U.S. light, sweet crude [CLCV1  102.78    0.08  (+0.08%)   ] for April settled down $1.68 at $102.70, after moving earlier between $100.62 to $105.06. 

Oil prices came under pressure early Thursday as the dollar strengthened on renewed Euro zone credit worries, but analysts said fears persisted that prolonged conflict in Libya could do long-lasting damage its oil infrastructure. 

Oil prices were also hit by data showing that China, the world's second largest oil importer, unexpectedly posted the largest trade deficit in seven years, stirring global economic growth worries.

Hangseng Today

Meski dibuka dengan gap-down, secara teknikal indeks Hang Seng masih bisa untuk sedikit rebound di awal perdagangan hari Jumat, terkait para investor masih banyak yang membeli saham di harga pelemahan-nya menjelang data inflasi Cina.

Namun potensi koreksi setelah mencapai level tinggi kemungkinan terjadi karena terpengaruh anjloknya bursa Wall Street semalam dan angka inflasi Cina yang telah muncul diatas ekspektasi.

Bias terlihat masih netral dalam jangka pendek, ini terukur dari sinyal yang berlawanan antara MACD dan stochastic pada grafik berikut. Dibutuhkan break ke atas 23520 untuk memicu momentum bullish lanjutan kembali menguji area 23680.

Sementara pecah ke bawah 23360 dan garis bawah channel bullish akan membawa Hang Seng kembali dalam range area 23045 – 23680.

Resistance Level : 23520, 23680, 23880

Support Level       : 23360, 23240, 23045

Trading Range       : 23045 – 23680

Hangseng test Level

Hang Seng diprediksi mengikuti penurunan saham Asia lainnya akibat pelemahan Wall Street tadi malam, sementara kekisruhan politik yang terjadi di Saudi Arabia diperkirakan akan membebani sentimen perdagangan pasar ekuiti, menurut Conita Hung, kepala riset Delta Asia Securities.

Ia memprediksi indeks akan mencoba level 23,300. "Investor juga masih akan melihat bagaimana performa pasar Cina menjelang data CPI bulan Februari yang dirilis hari ini," katanya. Melambungnya harga minyak masih akan berlanjut terkait masih berlangsungnya kekisruhan politik di Timur Tengah yang tampaknya akan menambah tekanan terhadap perusahaan pertambangan minyak dan maskapai penerbangan, katanya.

HSI ditutup turun 0.8% di 23,640 di hari Kamis.

Krisis Hutang Zona Eropa Kian Intens Jelang Peretemuan Uni Eropa

Jerman menolak desakan untuk menaikkan dana bantuan zona Eropa setelah Moody’s memangkas peringkat hutang Spanyol hari Kamis dan pasar kembali menekan Portugal pada malam menjelang pertemuan blok Eropa. Euro melemah ke level rendah mingguan, resiko premium obligasi Spanyol melebar dan credit default swap Spanyol, Yunani, dan Portugal naik seiring kecemasan baru mengenai zona Eropa yang menghantam pasar keuangan.

Pemimpim di zona Eropa diharapkan dapat mendukung rencana pelunakan oleh Jerman-Perancis untuk mendorong kompetitif ekonomi pada pertemuan di Brussels hari Jumat, namun nampaknya tidak dapat mengatasi perbedaan tajam pada jumlah dan jangkauan dana bantuan. Pejabat di Jerman melemahkan ekspektasi atas gebrakan baru, mengatakan keputusan yang diambil hari Jumat tidak akan menguatkan European Financial Stability Facility. "Pemerintah Jerman tidak percaya bahwa ini saat yang tepat untuk mediskusikan ini semua," ucap salah seorang pejabat Jerman dalam briefing menjelang rapat.

Hoard of Cash Lets Qaddafi Extend Fight Against Rebels

The Libyan leader Col. Muammar el-Qaddafi has “tens of billions” in cash secretly hidden away in Tripoli, allowing him to prolong his fight against rebel forces despite an international freeze on many of the Libyan government’s assets, according to American and other intelligence officials.

Colonel Qaddafi has control over the huge cash deposits, which have been stored at the Libyan Central Bank and other banks around the Libyan capital in recent years, the officials said.

Since the protests and fighting erupted, some of the money may have been moved into Colonel Qaddafi’s Tripoli compound, Bab Al Azizia, according to one person with ties to the Libyan government. While United States intelligence officials said they could not confirm such a move, one official said that Colonel Qaddafi “likely has tens of billions in cash that he can access inside Libya.” 

The money — in Libyan dinars, United States dollars and possibly other foreign currencies — allows Colonel Qaddafi to pay his troops, African mercenaries and political supporters in the face of a determined uprising, said the intelligence officials, speaking on the condition of anonymity. 

The huge cash reserves have, at least temporarily, diminished the impact of economic sanctions on Colonel Qaddafi and his government. The possibility that he could resist the rebellion in his country for a sustained period could place greater pressure for action on the Obama administration and European leaders, who had hoped that the Libyan leader would be forced from power quickly. 

President Obama’s national security team met at the White House on Wednesday to discuss how to oust the Libyan leader, including the possible imposition of a no-flight zone, but made no decisions, according to the White House press secretary, Jay Carney. 

The United States has relied so far on imposing financial pain on the Qaddafi government, freezing nearly $32 billion of Libya’s assets, according to Treasury Department officials. The United Nations and the European Union have imposed separate sanctions and have frozen assets as well.

But those actions have been limited to funds in the international banking system and to business investments outside of Libya. Inside the country, the intelligence officials said, Colonel Qaddafi has amassed a huge rainy day fund of cash. 

Kenneth Barden, a lawyer who specializes in Middle East financing and advises financial institutions on ways to guard against money laundering, said there were indications that Colonel Qaddafi had moved billions of dollars in assets just days or weeks before the outbreak of violence in Tripoli, apparently to protect his family wealth from global sanctions. 

“The money that is kept in Qaddafi’s name is probably small,” Mr. Barden said, “but he’s got a lot in the names of family members and close associates.”

But Colonel Qaddafi probably began hoarding liquid assets far earlier, officials said. He has built up Libya’s cash reserves in the years since the West began lifting economic sanctions on his government in 2004, following his decision to renounce unconventional weapons and cooperate with the United States in the fight against Al Qaeda. That led to a flood of Western investment in the Libyan oil and natural gas industries, and access to international oil and financial markets. 

Colonel Qaddafi, however, apparently feared that sanctions would someday be reimposed and secretly began setting aside cash in Tripoli that could not be seized by Western banks, according to the officials. He used the Libyan Central Bank, which he controls, and private banks in the city. He also directed that many government transactions, including some sales on the international oil spot market, be conducted in cash. “He learned to keep cash around,” said the person with ties to Libyan government officials, who asked to remain anonymous for fear of putting them in jeopardy.

The reserves are likely to prove even more critical to Colonel Qaddafi as the government’s revenues dwindle from oil production. 

With the unrest, Libya is pumping just 300,000 to 400,000 barrels of oil a day, down sharply from its typical production of 1.8 million barrels a day, according to Holly Pattenden, head of oil and gas analysis at the Business Monitor International in London.

Serangan gaddafi

pasukan Muammar Gaddafi meluncurkan sebuah pemboman yang intens di kota-kota minyak timur Libya Ras Lanuf, Es Sider dan Brega pada hari Kamis di garis depan serangan yang melibatkan pesawat tempur, tank dan kapal.

Serangan pada port minyak dikirim kegelisahan melalui pasar minyak karena ketakutan ini bisa menandai strategi baru dengan Gaddafi untuk menargetkan fasilitas minyak, mengganggu pasokan dari produsen OPEC dan mengirim harga minyak mentah dunia lebih tinggi.

Namun sejauh ini tidak ada tanda-tanda kampanye yang disengaja untuk mengganggu pasokan minyak lebih luas atau menghancurkan infrastruktur minyak.

Athough Ras Lanuf dan Brega telah menyerang sejauh fasilitas sendiri telah diselamatkan. Es Sider telah terpukul.

Bom atau misil mendarat beberapa kilometer (mil) dari kilang minyak Ras Lanuf dan dekat dengan bangunan gedung Emirates Kilang Minyak Libya Perusahaan dekat garis depan di timur di mana pemberontak dan pasukan pemerintah sedang berperang.

"Satu bom mendarat di sebuah rumah sipil di Ras Lanuf," pemberontak tempur Izeddine Sheikhy kepada Reuters. Ia mengatakan pemboman itu tampaknya telah datang dari arah laut.

"Saya melihat kapal kemarin dan hari ini. Rudal sedang dipecat dari mereka," kata pemberontak tempur Mohd Fadl.

koresponden Reuters juga melihat serangan udara dari pesawat di atas Ras Lanuf, sekitar 590 km (370 mil) timur Tripoli.

Saksi mata mengatakan itu menghantam pos pemeriksaan dekat kota timur. Tidak ada laporan segera tentang korban.

Memperluas serangan lebih ke wilayah yang dikuasai pemberontak di bagian timur Libya, Gaddafi pesawat tempur membom kota minyak Brega pada hari Kamis, pemberontak dilaporkan.

Brega belum ditargetkan untuk beberapa hari. Kota ini sekitar 90 km (56 mil) timur Ras Lanuf. "Ada saja serangan udara pada Brega-dua jet, dua bom," kata pemberontak tempur Mohamed Othman, berbicara melalui telepon.

Hassan Bulifa, anggota dewan Libya timur's Arab Gulf Oil Co (Agoco), sebuah unit negara perusahaan minyak National Oil Corp, mengatakan kepada Reuters Agoco adalah mengatur minyak pasar langsung kepada pembeli asing bukan melalui induknya milik negara.

Garis depan telah pindah ke bolak-balik antara Ras Lanuf dan kota strategis Bin Jawad, sekitar 60 km (38 mil) barat.

"Saya melihat roket-roket yang berasal dari perahu di dekat pelabuhan Es Sider," kata pejuang Adel Yahya, menambahkan: "Ada revolusioner di Es Sider dan dekat dengan Bin Jawad Gaddafi pasukan juga di pinggiran Bin Jawad, tapi di sisi barat.. "

Pemberontak, yang telah sangat-sangat luas wilayah di timur dan yang menjadi lebih terorganisir, telah berhenti dari mengambil jalan menuju pantai barat target berharga, Sirte, Gaddafi kampung, oleh tank dan pesawat tempur.

Di push dari kota Benghazi kedua Libya, di mana pemberontakan dimulai dan di mana para pemberontak kini memiliki markas mereka, tentara pemberontak dari pembelot dan relawan muda ditangkap kota minyak dari Brega dan Ras Lanuf.

Pada instalasi Lanuf Ras, insinyur terbakar off gas beracun dalam kasus hit langsung, kata pemberontak, menambahkan ada beberapa dekat-misses pada hari Kamis. Gerbang yang dijaga oleh penjaga dan tumpukan asap mengepul menunjukkan itu berfungsi.

Pekerja di kilang lainnya menyatakan keprihatinan tentang bom yang dijatuhkan di fasilitas dan berapa banyak kerusakan dapat disebabkan ke daerah sekitarnya.

Evakuasi Heatrow Jatuhkan Sterling

Sterling makin terpuruk setelah televisi Sky News laporkan salah satu terminal di bandara Heatrow sedang dievakuasi. Belum dapat dipastikan penyebab evakuasi, namun berita ini makin perburuk sentimen setelah BoE kembali tahan suku bunga di level rendah 0,5%. Sebagian kecil pelaku pasar sempat ekspektasikan kenaikan suku bunga BOE pada pertemuan Maret demi redam tekanan inflasi. Namun, mereka sepertinya kecewa dengan kebijakan BoE yang tidak mengubah kebijakan moneternya.

Pound Anjlok Pasca Keputusan BoE

Pound tergelincir lebih dari 30 pips terhadap Dollar AS dan melemah terhadap mata uang utama lainnya pasca pengumuman keputusan suku bunga BoE yang tidak berubah, serta mempertahankan program pembelian aset senilai 200 milyar Pound.

GBP/USD anjlok dari area 1.6175 hingga ke 1.6142, sedangkan GBP/JPY beringsut dari posisi tinggi harian di 134.34 ke kisaran 133.95, dan EUR/GBP berhasil pulih dari level rendah harian di 0.8535 untuk beranjak naik lebih tinggi ke area 0.8565.

 

Bank of England memutuskan untuk tetap mempertahankan suku bunga acuan pada tingkat 0,5% untuk 25 bulan berturut-turut, serta mempertahankan program pelonggaran kuantitatifnya tidak berubah pada 200 milyar Pound.

BoE Tahan Bunga 0,5%

BoE kembali menahan suku bunga di level rendah 0,5% dan tidak merubah program pembelian obligasi 200 miliar pounds. Sterling turun 20 pips seiring investor lakukan aksi ambil untung.

Downgrade Spanyol Resahkan Pasar Eropa

Pasar Eropa menjalani sesi perdagangan hari Kamis dengan mencatat penurunan yang cukup signifikan pasca Moody's memangkas rating kredit Spanyol, yang mengangkat masalah krisis hutang kawasan kembali menjadi sorotan.

Indeks Eurostoxx 50 anjlok 1,05%, sementara Indeks DAX Jerman dan CAC Perancis masing-masing kehilangan 0,72% dan 0,8%. Di Inggris, Indeks FTSE bergerak 0,78% lebih rendah setelah 2 jam perdagangan dimulai.

Moody's memangkas peringkat hutang Spanyol sebanyak satu tingkat menjadi ‘AA2’ dari ‘Aa1’ sebelumnya dengan outlook "negatif". Perekonomian negara itu tengah dilanda kekhawatiran terhadap kemampuan pemerintah dalam merestrukturisasi sektor keuangan.

Ancaman bailout Portugal

Portugal berhasil lelang obligasi senilai €1 M bertenor dua tahun, tetapi biaya pinjaman makin mahal sehingga tegaskan kecemasan Lisbon akan segera ajukan bailout. Yield obligasi mencapai 5.993%, lebih tinggi dari lelang sebelumnya 4.086%; rasio bid-to-cover juga turun menjadi 1.6. "Dengan yield yang tinggi sekarang maka ekspektasi Portugal ajukan bailout akan terjaga," ungkap strategis Rabobank Richard McGuire. Yield obligasi pemerintah Portugal bertenor 10 tahun juga cetak rekor 7,78%.

Investor masih jauhi obligasi pemerintah Portugal karena cemas Lisbon akan ikuti jejak Yunani dan Irlandia ajukan bailout. Meskipun demikian, pemerintah Portugal masih yakin tidak butuh dana talangan dan sanggup membayar biaya pinjaman tinggi untuk sementara waktu. "Kurva imbal hasil Portugal praktis datar dan di tingkat tinggi; ini tunjukkan investor masih coba tentukan premi yang layak, tapi investor masih belum bisa lakukan," papar Filipe Silva, manajer Banco Carregosa. "Kondisi serupa juga terjadi di Yunani dan di Irlandia sebelum kedua negara tersebut akhirnya ajukan bailout."

Arab Saudi Pertahankan Alokasi Stabil

Arab Saudi, eksportir minyak mentah terbesar dunia, akan menyediakan suplai dalam volume stabil, stabil dari level dibulan Maret, dikatakan sebuah sumber industri yang mengetahui masalah tersebut hari Kamis.

“Kapasitas alokasi adalah hal yang kami minta saat ini”, dikatakan salah satu sumber tersebut. “Tidak ada perubahan dalam kapasitas alokasi untuk setiap grade dari bulan lalu”.

 

Pergerakan harga secara umum sesuai perkiraan seiring Arab Saudi dan OPEC mengatakan di akhir Februari bahwa kedua belah pihak tersebut akan menyediakan suplai karena adanya gangguan persediaan yang disebabkan ketegangan politik di Libya.

China market

Cina melaporkan defisit perdagangan yang tak terduga sebesar $7.3 miliar, penurunan terbesar dalam 7 tahun, sebuah hambatan untuk pemerintah Cina terhadap argumen AS untuk penguatan Yuan.

Ekspor dibulan Februari naik 2.4% dari tahun sebelumnya, paling tidak sejak 2009 bersama hari libur Imlek yang menghambat pengapalan, dan impor yang naik 19.4%, dilaporkan biro data Bea Cukai hari ini.

Penasehat bank sentral, Li Daokui mengatakan bahwa suplus perdagangan selama 1 tahun penuh akan menyusut dari level 2010 (tahun sebelumnya).

Next Target for Silver $39, But Stop Loss is Key

Which is better – gold or silver? Often consigned as an industrial metal with limited value, silver has outshined gold in the past 18 months. Between July 2010 and January 2011 the COMEX silver futures price rose by 72 percent from $18.00 to $31.00. Silver outperformed gold by more than three times and it continues to do so.

 

Chart analysis shows a significant change in the trend and provides a method to set the next upside target in this speculative bubble.

The silver market was dominated by a strong historical resistance level near $19.00. This capped the trend rise starting in October 2008. Silver first encountered this resistance level in December 2009 and then tested the level several times in 2010 before developing a breakout in July 2010. 

The rise from $19.00 to $31.00 was a smooth continuous trend that carried the price into blue sky territory. The uptrend line defining this trend is used to track the continuation of this trend following the retreat and rebound behavior in January. Blue sky describes the situation where the price is making new all time highs. Investors cannot use historical price activity to establish support and resistance levels, or new profit targets.

The retreat from the peak found support near $27.00. This was also a small consolidation area in the trend in November 2010. The current price rebound from $27.00 has resistance near $31.00, based on the previous peak high. This price activity developed a consolidation band and this chart pattern provides a method for projecting future price targets.

The width of the consolidation band is measured, and this value is projected upwards. This gave us a potential target near $35.00. That rise of 16 percent has already been achieved. The acceleration of this breakout activity and the better rate of return is attracting investors who want better returns. This leverage impact is increased by trading in silver mines and silver producers. 

The width of the consolidation band is projected upwards again to give a new upside target of  $39.00. This double projection method has been successfully applied to other fast moving trends and sets valid targets. However, this double projection method also confirms a speculative bubble so traders follow these rises with tight stop loss conditions. 

The price of silver has again moved above the uptrend line and this is now used as a support level for the rising trend. A close below the uptrend line is particularly bearish because it is associated with the collapse of speculative momentum. 

Historically the demand for silver has been driven largely by the growth of the photography industry and this has collapsed with the rise of digital photography. This destruction of silver demand has not acted a brake on the recent uptrend developments. This disconnection between any obvious changes in physical demand for silver and the silver price also points the way to a speculative bubble. This suggests that silver is a useful trading instrument because bubbles inevitably collapse. For now though, silver will continue to outshine gold in the current market.

Gold Steady Despite Oil Gains; Silver ETF Record High

Gold held steady on Thursday despite a rebound in oil prices as investors waited to see if the international community would agree to a "no fly" zone for Libya, while holdings in the world's largest silver exchange-traded fund struck a record high, reflecting greater interest in the relatively cheaper precious metal.

Bullion traders remain focused on mounting unrest across the Arab World and renewed concern about euro zone debt — factors which sent prices to an all time high above $1,440 earlier this week. Platinum and palladium were mostly steady but falling equities were likely to weigh on sentiment. 

  

Spot gold [XAU=  1429.25    0.46  (+0.03%)] was steady at $1,429, having struck a record high of $1,444.40 an ounce on Monday.  

The U.S. military would be able to establish a "no-fly" zone over Libya within a couple of days if the international community decided that such a move was needed, a top U.S. general said on Wednesday, but the United Nations Security Council is split on whether to authorize such an action.

"Another factor that could see gold and silver higher would be the return of the euro zone sovereign debt crisis. Investors will be looking forward to euro zone policy makers meeting this Friday. If there's no resolution, perhaps we could see a new high," said Ong Yi Ling, investment analyst at Phillip Futures in Singapore.

"I think there's an increase in investment interest in silver with gold hitting new record highs. Silver is commonly perceived as the poor man's gold." 

Silver [XAG=  36.04    -0.01  (-0.03%)   ] was steady at $35.92 an ounce, off a 31-year peak around $36 hit on Monday.  

The iShares Silver Trust [SLV  35.27    0.09  (+0.26%)   ] said its holdings hit a record high at 10,974.06 metric tones by March 9. The previous record was 10,964.14, set on Dec. 14, 2010.

"I think silver is only chasing gold. Some people think silver could reach $100. But I guess it needs to surpass $40 first before hitting a new high," said a dealer in Hong Kong. 

"Sentiment in gold is neutral. People won't commit too much at these price levels. There's a bit of buying at around $1,425. I guess jewelers would have to buy. They have to do the business." 

The physical gold market also lacked activity in Singapore, a center for bullion trading in Southeast Asia.  

The euro steadied on Thursday off a one-week low, but the currency is increasingly undermined by worries about how Europe will mend fiscal problems of several euro zone countries as the market looks to a European policymaker meeting and stress tests on banks planned in the coming weeks. 

The goal for Friday's euro zone summit, to be attended by 17 heads of state, is to agree a competitiveness pact to be adopted by the bloc members to show their commitment to overhauling their economies.

U.S. gold futures for April [GCCV1  1430.20    0.60  (+0.04%)] traded around $1,429.6 an ounce. The contract hit record at $1,445.70 on Monday, mainly due to unrest in North Africa and the Middle East that sent oil prices higher.

Oil rose around 0.4 percent on Thursday with U.S. crude near $105 and Brent above $116 a barrel, after forces loyal to Libyan leader Muammar Gaddafi bombed oil industry infrastructure, inflicting what could be longer-term damage on the country's exporting capacity. 

The White House on Wednesday strongly defended its response to the turmoil in Libya, insisting it has taken "dramatic action" and rebutting criticism that its consensus-based approach is too cautious.

With Libyan rebels fragmented and disorganized and Gaddafi's forces successfully counter-attacking, the Obama administration has been struggling to craft a strategy that forces Gaddafi from power without entangling the United States in a new war in the Muslim world.

 

China's import of commodities, most of which posted strong increases in January, may finally show signs of easing in February as an extended holiday season disrupted shipments and high prices cut orders.

Brent Tops $116 as Gaddafi Bombs Libyan Oil Facilities

Brent crude rose 0.3 percent to surpass $116 on Thursday after forces loyal to Libyan leader Muammar Gaddafi bombed oil industry infrastructure, inflicting what could be longer-term damage on the country's exporting capacity. 

Gaddafi's forces struck an oil pipeline leading to Es Sider and dropped bombs on storage tanks in the Ras Lanuf oil terminal area in the eastern section of Libya that is rebel-controlled. Rebels said government forces also hit an oil pipeline leading to Sidrah.

"The large explosions and enormous columns of smoke from storage tanks and other facilities in Ras Lanuf, close to the Es Sider terminal, are perhaps more than merely symbolic," Barclays Capital oil analysts headed by Paul Horsnell said. 

"They represent a final fading of any residual realistic hope that the outage of Libyan oil could prove to be anything other than prolonged."

In London, Brent crude for April [LCOCV1  116.31    0.37  (+0.32%)   ] gained 34 cents to $116.28 a barrel after soaring almost $3 on Wednesday, or 2.5 percent, from as low as $112.16. They reached a 2-1/2-year high of $119.79 on Feb. 24.  

Nymex light sweet crude [CLCV1  104.87    0.49  (+0.47%)   ] gained 27 cents to $104.65, after touching a 2-1/2-year peak of almost $107 earlier this week. 

On Wednesday, U.S. crude fell after stockpiles at the pricing point for benchmark West Texas Intermediate at Cushing, Oklahoma, surged 1.7 million barrels to a record of almost 40.3 million barrels, according to the U.S. Energy Information Administration. 

That caused the discount of WTI to European marker Brent to widen to almost $12 a barrel from about $8 the previous day.  

Total U.S. crude inventories rose 2.5 million barrels last week, the EIA said, dwarfing the forecast for an increase of just 400,000 barrels in a Reuters poll. The weekly inventory data also showed drawdowns for gasoline and distillates were bigger than expected, reflecting improving demand. 

Confirming previous non-Libyan estimates, Shokri Ghanem, chairman of Libya's National Oil Corp, said that production has been cut to about half a million barrels per day from 1.6 million bpd by the war, as many foreign and local workers have left oil fields.   

Libyan oil trade has been paralyzed as banks decline to clear payments in dollars due to U.S. sanctions, though Austrian energy group OMV said it had been buying small amounts of Libyan crude oil and would continue to do so.  

"It appears that most of Libya's bridges with OECD countries in particular are already aflame or may have already been burned," Barclays Capital said. 

"One can now easily imagine circumstances in which Libya's previously very short-haul exports of crude oil become very long-haul indeed."  

A Libyan insurgent said rebels had retaken the heart of the closest city to the capital from forces loyal to Gaddafi on Wednesday evening in some of the fiercest fighting in almost three weeks of clashes.

Saudi Arabia has increased production to 9 million bpd, almost 1 million bpd above its current OPEC target. The kingdom says it currently holds spare capacity of 3.5 mln bpd.

Still, an OPEC delegate said on Wednesday that the group saw no need for an emergency meeting to discuss raising output. 

Saudi Shi'ites staged another small protest in the kingdom's Eastern province, defying a ban on demonstrations, but Foreign Minister Prince Saud al-Faisal said dialogue, not protest, was the best way to bring about change.

Saudi Arabia's ruling family has mobilized the power of its conservative religious establishment to prevent a wave of uprisings against Arab autocrats from roaring into its kingdom, home to more than a fifth of the world's known oil reserves.

The U.S. believes new sanctions should be put on Iran and existing ones more tightly enforced after talks on reining in Tehran's nuclear program failed in January, a U.S. official said on Wednesday.

China is confident that it can hold inflation to an average of 4 percent this year, the government's statistics chief said on Thursday, but a central bank adviser warned that soaring commodity costs were adding to upside risks.

The country reported crude oil imports of 19.95 million tones of crude oil or 5.2 million barrels per day in February, compared with 21.80 million tones in January.

Oil Spike Due to 'Market Pricing in Risk': Exxon CEO

The spike in the price of crude oil has been brought about by the “market pricing in the risk premium on the future oil supply,” rather than a lack of supply currently, said Rex Tillerson, CEO and chairman of Exxon Mobil.

Tillerson, head of the world’s largest publicly-traded oil company [XOM  84.38    -0.22  (-0.26%)], was responding to the view of the Saudi Arabian oil minister. The cost of oil hovered below $105 a barrel.

“The $20 jump we've seen in the last few weeks is really the market pricing in the risk premium, as they [the Saudis] view it, on the future supply of oil,” he told CNBC.

Tillerson added oil is plentiful at this point, but the situation could change if delivery from a major supplier were to be disrupted. 

He said that the disruption from Libya is of minor importance because the country's production accounts for only 1 ½ percent of the global oil supply.

The last time the supply chain was broken in the US was after Hurricane Katrina in 2005 when the country’s strategic oil supply, a system in place throughout the world, had to be tapped, because oil tankers could not deliver crude oil to refineries in the gulf coast region.

Because each region in the world maintains strategic oil supplies to use in the event of a physical disruption, Tillerson said, the world is now better prepared for a crisis.

Asian shares fall amid ongoing Libya fighting

Asian shares fell Thursday, weighed down by ongoing fighting in Libya and a lackluster finish by Wall Street.

Japan's Nikkei 225 stock average was off 1.1 percent at 10,473.81, with nearly all sectors in negative territory.

 Toyota Motor Corp. tumbled more than 2 percent, and major bank Mitsubishi UFJ Financial Group Inc. fell 1.6 percent.

Hong Kong's Hang Seng index retreated 0.4 percent to 23,722.14.

South Korea's Kospi extended losses after the central bank raised its key interest rate for the second time in three months Thursday. The index fell 1.2 percent to 1,978.41 in late morning trading.

Benchmarks in Australia, Taiwan, Singapore and mainland China also lost ground.

Bucking the trend was New Zealand's main stock index, which edged up less than 0.1 percent to 3,414.90 after the country's central bank cut its key interest rate to 2.5 percent from 3.0 percent. It described the decision as a pre-emptive move to soften the economic impact of last month's destructive earthquake in the city of Christchurch.

In New York on Wednesday, stocks slipped as crude oil prices hovered near $104 a barrel, continuing a three-week run of high prices that economists say could slow the economic recovery.

Fighting between rebels and forces loyal to Libyan leader Moammar Gadhafi set two oil installations ablaze and inflicted yet more damage on the country's crippled energy industry.

The Dow Jones industrial average fell 1.29, or less than 0.1 percent, to 12,213.09.

The broader S&P index lost 1.80 points, or 0.1 percent, to close at 1,320.02. The Nasdaq composite fell 14.05, or 0.5 percent, to 2,751.72.

In currencies, the dollar rose to 82.76 yen from 82.70 yen late Wednesday. The euro stood at $1.3916 from $1.3904.

Benchmark crude for April delivery rose 41 cents to $104.79 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 64 cents to settle at $104.38 a barrel Wednesday.