Oil prices strengthened with the front-month contract for WTI crude oil rose to as high as 112.48 before pulling back to 112.10. The corresponding contract for Brent crude oil climbed modestly higher but struggled to test 125.00. Investors largely ignore IEA's comment that 'high oil prices have already caused slowing demand in countries like China and the US'. Gold extended gains above 1500 with the benchmark Comex contract soaring to a new record high of $1509.5. Silver jumped for a third consecutive day with price surpassing 46.6 for the first time in 31 years.

At an interview, IEA's director Tanaka said high oil prices have dampened growth. There is a '6-month lag for the world economy to fully show the impact of high oil prices. But if they stay at current levels, the consequences will be bad'. Growth in Chinese oil demand has slowed. While part of it was a result of monetary tightening, 'high oil prices also play a big role'.

Meanwhile, Tanaka said the OPEC would need to raise output in June or July as European refineries returned after maintenance and as reconstruction works in Japan begin. Gas demand will also accelerate as radiation leak in Japan has suspended many nuclear projects across the globe. The IEA believed gas demand could be' much, much tighter in the future' as 'governments will increase the use of gas for power generation. The current glut in gas supplies will evaporate very quickly'.

On the dataflow, Germany's Ifo business climate index fell to 110.4 in April from 111.1 in the prior month. This is the second consecutive drop. The 'current assessment' index, however, climbed to 116.3 from 115.8 while the 'expectation' index slipped to 104.7 from 106.5. In the UK, retail sales surprisingly gained +0.2% m/m in March, compared with consensus of -0.4% and February's -1%. On annual basis, growth eased to +0.9% from +1.2%. Yet, it beat market expectations of +0.8%. Separately, net borrowing shrank to 18.6B pound in March from 19.8B pound a year ago.