Commodities Daily - April 26, 2021

> Oil holds steady ahead of busy week. Brent is sliding back toward $65.5/bbl as we write, with today's agenda including the Urals loading program for May, US durable goods orders for March and an OPEC+ technical committee meeting (ahead of the main JMMC meeting on Wednesday). Brent appears to have peaked at around $66.5/bbl and is starting to fall toward its April 22 low of $64.6/bbl, but it must overcome support at $65.5/bbl first. An unlikely break above $66.5/bbl could lead to the $67.1-67.6/bbl range.> Gold slides amid positive US macro data. Gold is trading at $1,780/oz as we write. The main item on today's macro agenda is March durable goods orders from the US. We expect gold to trade sideways in a $1,755-1,785/oz range today.> Base and platinum group metals make gains as climate summit wraps up, dollar weakens. At the international climate summit held by the US, many countries verbally made tougher climate commitments. Copper prices are at their highest levels in more than a decade after Chilean port workers went on strike. Meanwhile, exchange stockpiles of base metals, except for nickel, decreased last week.OIL HOLDS STEADY AHEAD OF BUSY WEEKBrent was trading at around $65.5/bbl on Friday morning with investors digesting upbeat preliminary IHS Markit eurozone PMIs for April. The composite PMI reached a nine-month high of 53.7, up from 53.2 in March, while the manufacturing PMI rose to a record high of 63.3 (from 62.5 in March) and the services PMI climbed above 50, into expansion territory (hitting an eight-month high of 50.3 versus 49.6 in March). These increases were something of a surprise given the tightened virus restrictions. The US PMI data was also upbeat, and the recoveries in the US and UK are now far outpacing those in the eurozone and Japan as restrictions are being relaxed in the US and UK. The US April composite PMI rose to a record 62.2 from 59.7 in March, the manufacturing PMI rose to a record 60.6 in April from 59.1 in March, while the services PMI also reached a record 63.1 from 60.4 in March. During the Wall Street session, Brent peaked at $66.3/bbl amid stock market tailwinds as investors embraced the strong data, shrugging off earlier concerns about potential higher US capital gains taxes under the Biden administration. Brent eventually settled at $66.11/bbl, $0.71/bbl above the previous settlement.Brent is sliding back toward $65.5/bbl as we write, as India is still reporting more than 300,000 cases each day, setting daily global records. Today it reported a whopping 352,991 new infections in the previous 24 hours. Signs of strain are starting to emerge among India's refiners, with some cutting processing rates, while Indian Oil Corporation has so far failed to issue a much expected tender to purchase West African crude. Today's agenda includes the Urals loading program for May, US durable goods orders for March and a OPEC+ technical committee meeting (ahead of the main JMMC meeting on Wednesday). Brent appears to have peaked at around $66.5/bbl and is starting to fall toward its April 22 low of $64.6/bbl, but it must overcome support at $65.5/bbl first. An unlikely break above $66.5/bbl could lead to the $67.1-67.6/bbl range.This week, apart from the JMMC OPEC+ meeting (which is very unlikely to deviate from its recent decision to start gradually adding about 2 mln bpd of production from May to July) and the weekly US inventory updates, the market will eye the first print of 1Q21 US GDP on Thursday and the monthly EIA oil market report on Friday. Major oil companies such as Royal Dutch Shell, Exxon Mobil and BP report quarterly earnings throughout the week. We think Brent is likely to continue trading around the $65/bbl mark this week as market sentiment is likely to keep swinging between surging optimism over the US and Europe and worries over the Indian crisis, with OPEC+ likely to confirm its plans to increase production. Despite additional OPEC+ barrels set to hit the market next month, Brent is firming in a bullish backwardation structure, signaling little concern about fresh LD SLIDES AMID POSITIVE US MACRO DATAGold tried to pare back its early losses on Friday and traded near $1,790/oz at one point, but it ended up sliding to $1,775/oz amid generally upbeat US macro data and a rise in the US 10y yield to 1.55%. Meanwhile, EUR/USD climbed to nearly 1.21, which provided some support to bullion. The strong US macro data on Friday included a reported 20.7% increase in new home sales in March, after the 16.2% decline in February. In addition, the preliminary April IHS Markit manufacturing PMI came in at 60.6, which was the highest reading on record (the data goes back to 2007) and above March's 59.1. The stimulus measures, the loosening of Covid restrictions and the relatively quick vaccine roll-out (more than 50% of US adults have had at least one vaccine dose administered) have helped the US economy get off to a strong start in the second quarter. This does not bode well for gold prices.During the Asian trading session today, gold rose to $1,780/oz. Its safe-haven appeal seems to be growing as the Covid situation in India and Japan deteriorates. The main item on today's macro agenda is March durable goods orders from the US. The top items on the agenda for the week as a whole include the Fed meeting and Chairman Jerome Powell's subsequent press conference, a speech from ECB President Christine Lagarde and US wholesale inventories on Wednesday, and then US and eurozone 1Q21 GDP data on Thursday and Friday, respectively. Also due this week are US and eurozone consumer confidence for April, the US personal income and spending data for March (including the PCE index readings), US pending home sales for March and weekly US jobless claims. We expect gold to trade sideways in a $1,755-1,785/oz range SE AND PLATINUM GROUP METALS MAKE GAINS AS CLIMATE SUMMIT WRAPS UP, DOLLAR WEAKENSOn Friday, futures on the LME closed with gains: copper rose 1.6% to $9,552/tonne, nickel 2.1% to $16,395/tonne and zinc 1.0% to $2,852/tonne. Meanwhile, aluminum and tin futures remained about flat for the day at $2,365/tonne and $26,780/tonne, respectively. Palladium rose 2.1% to $1,232/oz and platinum edged up 0.6% to $2,860/oz.The dollar continues to depreciate against world currencies amid elevated US inflation, expectations of continued monetary stimulus from the Fed and the possibility of a $2.25 trln infrastructure program in the US. The trend of dollar weakening has played out since the beginning of April, providing tailwinds for commodities quotes.At the international climate summit held by the US, many countries verbally made tougher climate commitments. This could mean an acceleration in the spread of solar panels, wind turbines and electric vehicles, which could in turn stimulate demand for metals needed for renewable energy, like cobalt, copper and nickel.Copper prices are peaking amid growing concerns about supply amid rising demand. The Chilean Port Workers' Union (40% of the world's copper is mined in Chile) has declared a strike, which is supposed to start today and is related to pensions. It is not yet clear how many port workers will join the strike, but even a partial halt in shipments of copper concentrate and copper from Chile will have a serious impact on copper prices. It is highly likely, in our view, that copper quotes will continue to climb against this backdrop.Platinum and palladium prices (both metals are used in the production of catalytic converters to control the emissions of vehicles with combustion engines) also got a boost after the climate summit.Exchange stockpiles of base metals, except for nickel, decreased last week, with those of aluminum down by 1.4%, copper by 2.0% and zinc by 2.4%. Nickel stocks on the largest exchanges rose by 0.5%