Commodities Daily - April 22, 2021

> Oil slides on slight US crude oil and gasoline stock builds amid Indian demand concerns. We expect Brent to fall to $63.8/bbl (a deeper slide toward the $62.5/bbl level is unlikely) on growing demand concerns, as it has fallen through support at $65.5/bbl (an unexpected break above this level could open the way toward resistance at $66.5/bbl).> Gold rises as Treasury yields stabilize. Yesterday, gold ended the day slightly higher at around $1,790/oz, as the yield on 10y Treasuries was steady near 1.56% and EUR/USD climbed to 1.203. Gold is again trading at $1,790/oz as we write. The main events today are the ECB meeting and the release of weekly jobless claims data from the US. We expect gold to return to sideways trading in the $1,755-1,785/oz range today.OIL SLIDES ON SLIGHT US CRUDE OIL AND GASOLINE STOCK BUILDS AMID INDIAN DEMAND CONCERNSEarly in the European session yesterday, Brent slid from $66.5/bbl toward $65.0/bbl on positive dollar momentum (though this proved temporary), with investors also reacting to surging Covid cases in India, the world's third largest oil importer. Today, India reported a record 314,835 new cases, surpassing the 314,312 new cases reported by the US on December 21. For clues on how Indian oil demand is holding up in the face of the new wave, we can look at Nigeria's crude sales - Indian Oil Corporation is expected to seek West African crude this week and the tender process may give signals about demand. Meanwhile, Japan, the world's fourth largest oil importer, plans to impose a fresh state of emergency in the Tokyo, Osaka, Kyoto and Hyogo prefectures on Friday as infections surge with just three months until the Summer Olympics. This is offsetting supportive reports of rebounding demand in China and the US. In addition, France plans to lift curbs on movement and reopen schools in the coming weeks, while Greece will ease most lockdown measures in May ahead of reopening for tourism.Ahead of the EIA inventory update, Brent rebounded toward $66.0/bbl as US and European stocks bounced back from large drops in previous days. Following the API's previously reported 0.436 mln bbl crude oil build, the EIA yesterday registered a slightly stronger 0.594 mln bbl increase. This came amid a 0.29 mln bpd decrease in refinery inputs to 14.76 mln bpd (a four-week low, plagued by unplanned outages in the US Gulf and Midwest) and a 0.03 mln bpd decrease in exports to 2.55 mln bpd. A 0.45 mln bpd decrease in imports proved insufficient to offset the overall build. Also note that crude oil production held steady at 11 mln bpd. The refined product data was mixed. Gasoline stocks were up by a very slight 0.08 mln bbl to 235.00 mln bbl, while distillate stocks fell 1.1 mln bbl to 142.4 mln bbl. The four-week average demand for refined products ticked higher, as did that for gasoline to 8.93 mln bpd, about 0.50 mln bpd shy of the same week in 2019. Total commercial petroleum stockpiles (oil and refined products combined, excluding strategic petroleum reserves) rose 3.56 mln bbl amid a 2.60 mln bbl build in the "other oils" category. We continue to expect total US oil and refined product inventories to start trending lower in mid-May.Following the release, Brent slid back to $65/bbl, which in our view was not due to the EIA data, but mainly to the fact that recent days and last week have seen surging case numbers, led by India. This morning, Brent is hovering above $65/bbl, with investors continuing to follow the Covid story and focused on the ECB rate decision and US weekly jobless claims today. We expect Brent to fall to $63.8/bbl (a deeper slide toward the $62.5/bbl level is unlikely) on growing demand concerns, as it has fallen through support at $65.5/bbl (an unexpected break above this level could open the way toward resistance at $66.5/bbl) LD RISES AS TREASURY YIELDS STABILIZEGold firmed to $1,790/oz yesterday, as the 10y US Treasury yield consolidated at 1.56% and EUR/USD climbed to 1.203. India registered 314,835 new cases of Covid-19 yesterday, the highest number of infections recorded in a single day in any country since the start of the pandemic. The accelerating rise in new cases globally has dampened expectations for a quick economic rebound and fueled demand for gold. It also helped US Treasury yields stabilize yesterday and contributed to strong demand at yesterday's auction of a 20y issue. Gold is trading near $1,790/oz as we write, with the ECB meeting looming. The ECB will most likely keep its policy unchanged and emphasize that its stimulus measures are keeping the pandemic-struck European economy afloat, which should ease concerns that these measures will be rolled back too soon. Also prominent on today's agenda is the weekly jobless claims data from the US. We expect bullion to return to sideways trading in a $1,755-1,785/oz range