Commodities Daily - April 21, 2021

> Oil tumbles amid resurgent virus and retreat in equities. Today, investors will eye the weekly EIA update on US oil and refined product inventories. We anticipate an upbeat draw in total commercial petroleum stockpiles and a further increase in gasoline demand, which should keep Brent above the $65.5/bbl support level today. A break below this level would open the way toward the $63.8/bbl level; resistance is at $66.5/bbl, followed by $67.3/bbl.> Gold pares back losses amid Treasury yield correction. Gold is trading just above $1,780/oz as we write. Investors are eyeing the US 20y Treasury bond auction later today. We expect bullion to trade sideways at $1,755-1,785/oz today.> Base metal prices fall on LME, with tin the only exception. Copper reached as high as $9,485/tonne yesterday (it later gave back its gains and closed lower on the day), not far from the key $9,500/tonne mark. We expect a breach of $10,000/tonne in 2Q21. Meanwhile, China's imports of tin concentrate from Myanmar rose 34% y-o-y in March, which is not at all what we had expected given what the country is going through. Sources on the ground in Myanmar had indicated that logistics services and customs were no longer functioning in the wake of the military coup, and that production had been halted at one of the country's tin projects.OIL TUMBLES AMID RESURGENT VIRUS AND RETREAT IN EQUITIESAt the start of the day yesterday, Brent gained around $1.0/bbl to $68.1/bbl on the news that Libya's National Oil Corporation had declared a force majeure on exports from the port of Hariga and said the same action could be taken with respect to other facilities, citing a budget dispute. Libya's oil production has fallen around 0.2 mln bpd to below 1.0 mln bpd as a result. However, in the early European trading hours yesterday, Brent started to slide toward the $67.2-67.3/bbl support range amid a downtrend in the FTSE 100, S&P 500 futures and EUR/USD. Almost right after the start of the Wall Street session, Brent tumbled to an intraday low of $65.5/bbl amid a continued selloff in global equities as investors shunned risk. It eventually settled at $66.57/bbl, $0.48/bbl below the previous settlement.The main catalyst behind this global move lower was concerns that a resurgent virus will further depress demand in some economies. For example, soaring cases in India (the world's third-largest oil consumer) have forced its financial and political capitals to impose restrictions on movement. Today, the Indian health ministry reported a record spike of nearly 300,000 fresh cases. Yesterday, Indian Prime Minister Narendra Modi urged state governments to impose lockdowns only as a last resort. Meanwhile in Japan, Tokyo and Osaka (the two biggest and economically important cities) are set to ask the federal government to declare a state of emergency to contain a surge in cases. Oil prices have surged this year on an optimistic oil demand outlook amid the vaccination rollout. Based on this, OPEC+ decided to start easing the deep supply cuts in May. However, the actual epidemiological situation in India, Japan and Europe has started to undermine this narrative.Overnight, the API reported that US crude stockpiles rose 0.436 mln bbl last week. The refined product data was mixed, showing a 1.600 mln bbl draw in gasoline stocks and a 0.655 mln bbl build in distillate inventories. The EIA weekly inventory report is due today at 17:30 Moscow time. The Bloomberg consensus is for a 3.55 mln bbl crude draw, a 1.00 mln bbl increase in gasoline stocks and a 1.70 mln bbl decrease in distillate stocks. We anticipate an upbeat draw in total commercial petroleum stockpiles and a further increase in gasoline demand, which should keep Brent above the $65.5/bbl support level today. A break below this level would open the way toward the $63.8/bbl level; resistance is at $66.5/bbl, followed by $67.3/ LD PARES BACK LOSSES AMID TREASURY YIELD CORRECTIONGold firmed to $1,780/oz yesterday as the 10y US Treasury yield failed to consolidate above 1.6% and slid to 1.56%. EUR/USD held steady near 1.20. Bullion found support from yields yesterday as the opportunity cost of holding non-yielding gold declined. German PPI for March yesterday indicated rising prices (up 3.7% y-o-y and 0.9% m-o-m) in the eurozone's largest economy, despite tightened restrictions to tackle the third wave of Covid in the country in March. This data release did not have a significant impact on gold yesterday. The global one-week moving average of new positive coronavirus cases hit a record high yesterday. Given the accelerating spread, investors are likely to expect the Fed and other central banks to remain dovish.Gold is trading just above $1,785/oz as we write ahead of tomorrow's ECB meeting. Today's auction of 20y US Treasuries will be in focus later on. We think gold might try to test resistance at $1,790/oz, but we see insufficient drivers to break that level, so we expect bullion to trade sideways at $1,755-1,785/oz today. SE METAL PRICES FALL ON LME, WITH TIN THE ONLY EXCEPTIONThree-month aluminum futures on the LME fell 0.9% to $2,310/tonne yesterday, while copper dropped 0.6% to $9,322/tonne, nickel 0.5% to $16,038/tonne and zinc 1.1% to $2,814/tonne. Tin was an outlier, rising 0.4% to $26,822/tonne.Copper rose to as high as $9,485/tonne over the course of yesterday's trading, not far at all from the $9,500/tonne mark. We expect copper to surpass $10,000/tonne in 2Q21. However, it should be kept in mind that once these two key levels ($9,500/tonne and $10,000/tonne) are reached, we are likely to see a brief period of profit taking, with prices slipping somewhat.China has published data on its raw material imports from Myanmar, which not long ago experienced a military coup. The country's nickel pig iron (NPI) imports from Myanmar fell 90% m-o-m and 94% y-o-y in March, but its imports of tin concentrate (used to produce refined tin) rose 120% m-o-m and 34.2% y-o-y. This is not at all what we had expected. Sources on the ground in Myanmar had indicated that logistics services and customs were no longer functioning, and that production had been halted at one of the country's tin projects. China's reported sharp uptick in tin concentrate imports may be attributable to a pickup in shipments from warehouses, which, if true, would mean that we should soon see a decline commensurate with the drop in NPI imports, which have shrunk 90% since the coup. If, on the other hand, Chinese importers were able to ensure uninterrupted production in Myanmar and a continued supply of raw materials, then a correction in tin prices is very likely. Since the beginning of April, tin has risen 5.7% in price to $26,822/