Crude oil is trading with a soft tone above $40/bbl in Asian morning. Although OPEC member claim that they will cut oil production as agreed in December, investors still worry that decline in demand will be much faster than supply reduction. Deutsche Bank last week cut its 2009 oil price forecast to $45 from $47.5 as the analyst expects crude oil consumption will fall by 1M bpd. However, the analyst said low oil price condition will be changed in 1-2 years. Middle East tension update: Israel moved into Gaza City yesterday as the capacity of Hamas' militant was degraded. Israeli troops have killed 887 and injured at least 3600 Palestinians as the assault enters its 16th day while 13 Israelis have died. International pressures have requested an immediate and complete ceasefire. Russia-Ukraine natural gas supply: Russia refused to resume natural gas supply through Ukraine to Europe, saying Ukraine signed the accord of transit monitoring but then issued what it called a 'declaration' to accompany it. However, the EU insisted that the declaration will not change the agreement and urge Russia to act fast as it will still take 3 days for the gas to reach European countries after Russia's resumption. Stock markets drop in Asia as led by commodity stocks. The MSCI Asia Pacific (ex Japan) Index plunged 2.6% and Australia's S&P/ASX 200 Index slid 1.6%. Mining giant Rio Tinto lost 5% as the company delayed an iron ore project in Brazil due to demand reduction. Gold price fell as the dollar rose against the Euro. Euro have been losing ground after making a temporary top at 1.4719 at mid-December and have plunged 9% since then. Recently, the fall exacerbated amid speculations on the ECB's rate cut decision this week. Currently, the market priced in a 50 bps reduction after the policymakers met on Jan 15. Previously, economists thought the central bank may pause the easing until February or March. Platinum continued its rise above 1000 level as there are signs showing demand surge in China and Japan.

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