Commodities Daily - April 20, 2021

> Oil makes gains amid dollar weakness and reduced Libyan supply due to force majeure. Today, all eyes will be on the IEA global energy review and the API's US oil and refined product inventory data overnight. Brent managed to break above the $67.2/bbl resistance level this morning, and we now expect it to target the $68.4-68.8/bbl technical range.> Gold eases as US Treasury yields rebound. Gold is trading at $1,770/oz as we write. Investors are currently eyeing the German PPI data for March that was published earlier this morning. We expect bullion to trade sideways in a $1,755-1,785/oz range today.> Bullish sentiment prevailing in metals markets. Non-ferrous metals, steel products and PGMs have continued to climb in price due to a confluence of factors, including a rise in inflation across the globe, a weakening dollar and President Biden's massive infrastructure plan. The dollar has been weakening since the beginning of April almost without pause and is now back to where it was trading in early March.OIL MAKES GAINS AMID DOLLAR WEAKNESS AND REDUCED LIBYAN SUPPLY DUE TO FORCE MAJEUREBrent was trading at around $66.5/bbl yesterday morning and climbed above $67/bbl during the afternoon, eventually settling $0.28/bbl higher on the day at $67.05/bbl. One contributing factor was further dollar weakness, as the greenback yesterday slumped to a six-week low against other major currencies following last week's plunge in US Treasury yields after the Fed again stressed that any spike in inflation would likely be temporary. Improved risk sentiment, as evidenced by the rally in global stocks to record highs, is also weighing on the greenback and supporting oil. This morning, EUR/USD has drawn support from upbeat German PPI data and is marching toward 1.21 after bullishly breaching resistance at around 1.20 yesterday, which is pushing Brent toward $68/bbl as we write.Another supportive event for oil is that Libya's National Oil Corp (NOC) yesterday declared force majeure on exports from the port of Hariga and said it could extend the measure to other facilities due to a budget dispute with the country's central bank. Libya had appeared to be in a period of relative political calm that has seen oil production stabilize at 1.15-1.20 mln bpd, but politics has once again reared its ugly head, with production now dropping below 1 mln bpd. For now, we assume these outages will be brief and see them having little impact on oil prices while physical markets are still digesting the last of the crude inventory overhang. But with the oil market rebalancing set to be largely complete by the summer, prices (especially Brent calendar spreads) may soon become more sensitive to Libyan headlines, especially if any of the current round of problems drags on for more than a few days.Today, all eyes will be on the IEA global energy review and the API's US oil and refined product inventory data overnight. Brent managed to break above the $67.2/bbl resistance level this morning, and we now expect it to target the $68.4-68.8/bbl technical range. Oil prices are also rising as investors continue to expect the reopening of economies to stoke consumption and continue to drain global inventories. While the physical market has found a floor at around $62/bbl Brent, it is still digesting the last leg of destocking and will take some time to recover. We reiterate our view that in 3Q21 global oil demand is set to recover further, which we think would result in stronger backwardation across major oil benchmarks. OPEC+ is planning a cautious return of some supply from next month and could skip a full-scale meeting planned for next week, possibly indicating that members don't see much need to revise the current LD EASES AS US TREASURY YIELDS REBOUNDYesterday, gold slid to $1,770/oz as the 10y US Treasury yield wrestled with resistance at 1.60% and EUR/USD consolidated at 1.20. Gold remained under pressure from rising yields. Since there was not much in the way of data yesterday, bullion went back to moving in line with risk assets, and US stock indexes fell yesterday. News flow also added some headwinds for bullion, as US President Joe Biden met yesterday with a bipartisan group of lawmakers who have all served as either governors or mayors to try to reach a deal on his more than $2 trln jobs and infrastructure proposal. On the physical side of the market, the demand picture has been mixed. On the one hand, China, the world's biggest gold consumer, has given domestic and international banks permission to import large amounts of gold into the country, according to Reuters. On the other hand, India, the second largest importer of gold, is facing an extremely challenging wave of Covid-19, with one out of every three people tested returning a positive result.Gold is trading at $1,770/oz as we write. Investors are currently digesting fresh German PPI data for March to get a sense of where inflation is headed in the EU's largest economy, which was facing its third wave of Covid during the month. Today's auction of 5y US Treasuries will be in focus later on. We expect bullion to trade sideways within a $1,755-1,785/oz range LLISH SENTIMENT PREVAILING IN METALS MARKETSNon-ferrous metals, steel products and PGMs have continued to climb in price due to a confluence of factors, including a rise in inflation across the globe, a weakening dollar and President Biden's massive infrastructure plan. The dollar has been weakening since the beginning of April almost without pause and is now back to where it was trading in early March.Three-month aluminum futures rose 0.6% to $2,330/tonne on the LME yesterday, while copper climbed 1.8% to $9,376/tonne and tin edged up 0.4% to $26,718/tonne. However, nickel fell 1.5% to $16,121/tonne. The mood on the LME has been generally positive over the last five trading sessions, with all non-ferrous metals posting gains except for nickel. The biggest gain over the period came from copper (+5.8%) and the smallest from aluminum (+3.0%). The reason that nickel has not joined in on the uptrend is that the Philippines recently lifted a moratorium on new mining projects, which will allow the country to increase its supply of nickel concentrate in the near future. For the copper market, a new driver has been the commitment of China's largest copper smelters to limit their commissioning of copper smelting capacity to help China achieve its climate goals. All in all, we expect the enthusiasm in the non-ferrous metals markets to persist for some time. Today on the LME and SHFE we saw a somewhat rare occurrence - stockpiles of all basic metals (aluminum, copper, nickel and zinc) fell, which suggests that producers have started supplying more metal to consumers rather than storing it in exchange warehouses. PGMs also continued to rally, with platinum rising 0.4% to $1,211/oz and palladium 1.2% to $2,809/oz. The dollar's continued weakness has been stimulating demand for precious metals. Prices have also continued to rise in the global steel market, and the rate of the climb in export prices for Russian steel has accelerated - over the past week, hot-rolled steel from Russia (HRC FOB Black Sea) has posted a 12% gain, the fastest price growth seen globally. This should lead to an increase in steel prices in the Russian domestic market. We do not expect steel prices to level off any earlier than