Crude Prices Bounce Bank 5% After Yesterday’s Steep Decline Crude Oil (WTI) $66.560 +$3.210 +5.07% Volatility has been the story in the market for Crude Oil futures as yesterday’s 6.5% freefall was followed by a near 5% price increase back above $67-per-barrel during intraday trading. Yesterday’s Department of Energy stockpile report, which revealed a 5.5 million barrel increase in Crude Oil inventory as opposed to an expected 1.5 million barrel contraction, trimmed nearly one third of the commodity’s gains since mid-July. Demand for Crude has been historically weak this summer as companies limit their consumption and in turn, do not achieve growth. However, Thursday’s encouraging fundamental data releases and better-than-expected corporate earnings reports returned Crude to its winning ways of late. In early morning trading, the Housing Industry of Australia’s New Home Sales MoM figure for June was 0.5%, up from -5.6% in May. An increase in home sales signals a growing housing market, an essential component of a global economic recovery. In Germany, the Euro-Zone’s largest economy based on Nominal GDP, the unemployment rate was held constant since last month. The Euro-Zone’s Economic Confidence Indicator beat expectations, coming in at 76.0 (75.0 expected). The positive fundamental news from the global economy heightened investor demand for risk appetite, leading to an increase in Crude future prices despite yesterday’s demand concerns. However, perhaps the most market-moving factor in Crude trading on Thursday was the barrage of optimistic corporate earnings releases that hinted towards an end to the global economic recession. This quarter in particular, projected EPS figures have been reduced so significantly that companies have managed to exceed expectations by simply cost cutting. As a result, nearly 80% of the S&P 500 companies that have reported their 2Q earnings beat expectations. And while the trend continued today, numerous companies not only posted good earnings but also improved their economic outlook for the remainder of 2009. As we approach the end of a volatile week for Crude, the psychological $65-per-barrel level remains in the rearview mirror. The CFTC hearings have come to a close, but Chairman Gensler seems determined to regulate commodity speculation, saying that “inaction is just not acceptable.” Lingering concern of government regulation will continue to impact the broader commodity market. Precious Metals Push Forward, Accelerate at US Session Open During yesterday’s trading session, Gold future prices managed to avoid heavy losses by only losing 1%. Risk aversion had bid the US dollar against its major competitors as investors fled from higher yielding currencies towards the “safe-haven currency.” Recall that Gold and the greenback tend to trade inversely as investors use the metal to hedge against dollar weakness and/or inflation. Today’s rise in equities (the S&P hit its highest level in 9 months while the NASDAQ broke through 2,000 during intraday trading) and encouraging fundamental data reports renewed investment in riskier assets, particularly the commodity-correlated Australian dollar, which outperformed all of its major competitors. The prospect of a global economic recovery carries with it inflationary fear, which may be confirmed by this evening’s Japanese Consumer Price Index report. Gold future prices saw nearly a full percentage point gain as a result, perhaps signaling a short-term re-test of the psychological $950-per-ounce price level. Silver $13.460 +$0.202 +1.52% Silver successfully bounced back from yesterday’s 3.5% decline, paring losses to close near the $13.500-per-ounce level. As was the case with Gold, dollar strength drove Silver prices downward yesterday. However, in addition to functioning as a precious metal, Silver holds its own industrial applications that make its future price particularly susceptible to fundamental data reports concerning global production. Yesterday’s disappointing US Durable Goods Orders figure (-2.5% actual vs. -0.6% expected) contributed to the metal’s steep decline; because Durable Goods last over three years by nature, they can be used as an indication of economic optimism regarding near-term growth. During today’s trading session, fundamentals seemed to point in the opposite direction. Japanese industrial production increased for the 4th straight month, which got the market moving. In the US session, the advancement of equities kept Silver strong throughout the day. Tomorrow’s US GDP will be the main market mover tomorrow; GDP is expected to contact an additional 1.5%, an improvement from the 1Q 5.5% contraction. If GDP manages to beat expectations, Silver could see significant upside.

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