Commodities Daily - April 28, 2021

> Oil ticks higher despite OPEC+ sticking to output hike plan; EIA weekly report eyed. Today, apart from the weekly EIA inventory update, investors in the oil market will pore over the FOMC meeting results. We think that Brent may soon start to rise toward its April 20 high of $68.1/bbl, possibly after an upbeat EIA report tonight. It has already broken through resistance at $66.5/bbl. However, we believe the benchmark is likely to remain stuck in a $64.7-$68.1/bbl range over the next couple of weeks.> Gold down as Treasury yields rise; Fed results eyed. Gold is trading at $1,770/oz as we write. Investors are eyeing today's Fed decision and Chairman Jerome Powell's speech. Bullion may test $1,760/oz today, which opens a path to $1,745/oz, while we see a move above $1,785/oz as unlikely.> LME base metal prices on the rise amid ongoing stockpile draws. Copper futures are up 10.7% over the last two weeks, and yesterday hit as high as $9,965/tonne, the highest level in a decade, but could not reach the $10,000/tonne threshold. However, today the strike of Chilean port workers is expected to end, which should put some pressure on copper prices. Meanwhile, if the Fed delivers hawkish signals, demand for platinum, where 20% of primary demand in 2020 came from investors, could take a hit.OIL TICKS HIGHER DESPITE OPEC+ STICKING TO OUTPUT HIKE PLAN; EIA WEEKLY REPORT EYEDFor most of yesterday, front-month Brent fluctuated within a $65.7-66.4/bbl range, holding up quite well in the face of the devastating coronavirus situation in India. After reporting a slight dip in new Covid infections and fatalities yesterday, today India reported a massive surge to 360,960 cases and 3,293 deaths. Countering this negative development was an upbeat reading from the US consumer confidence index, which jumped to a 14-month high in April, as the further progress in vaccinations and the fresh fiscal stimulus allowed more businesses in the service sector to reopen, boosted consumer demand and led to more hiring. Attention then began to shift to OPEC+, which decided to cancel the ministerial meeting that had been scheduled for today. The ministers on the market monitoring panel agreed that OPEC+ should stick to its current plan for gradual monthly output increases from May to July. This decision came alongside upbeat forecasts from OPEC for the recovery in global demand and despite the surge in coronavirus cases in India, Brazil and Japan. It is worth highlighting that Russian Deputy Prime Minister Alexander Novak said after the talks that the next OPEC+ ministerial meeting was scheduled for June 1. At this meeting, the ministers will discuss output quotas for July and August. An OPEC+ statement confirmed the June 1 date for the next meeting. Even though the ministerial panel decided to stick to the plan that was broadly agreed upon at the previous meeting on April 1, Brent spiked to an intraday high of $66.8/bbl around halfway into the US trading session. It eventually settled at $66.42/bbl, $0.77/bbl above the previous settlement.Overnight, the API reported that US crude stockpiles rose by 4.3 mln bbl last week. The refined product data, on the other hand, was upbeat, showing a 1.2 mln bbl draw in gasoline stocks and a 2.4 mln bbl draw in distillate inventories. The EIA weekly inventory report is due today at 17:30 Moscow time. The Bloomberg consensus is for a 1 mln bbl crude draw, a 0.3 mln bbl increase in gasoline stocks and a 1.0 mln bbl decrease in distillate stocks. We anticipate a bullish draw in total commercial petroleum stockpiles and a further increase in gasoline demand, which would most likely provide tailwinds for Brent. Today, in addition to the EIA update, investors in the oil market will pore over the FOMC meeting results. We think that Brent may soon start to rise toward its April 20 high of $68.1/bbl, possibly after an upbeat EIA report tonight. It has already broken through resistance at $66.5/bbl. However, we believe the benchmark is likely to remain stuck in a $64.7-$68.1/bbl range over the next couple of LD DOWN AS TREASURY YIELDS RISE; FED RESULTS EYEDYesterday, the gold price declined slightly to the $1,775/oz range amid a sharp rise in the 10y Treasury yield to 1.62% and EUR/USD was steady near 1.209. The Conference Board`s consumer confidence index jumped to 121.7 points this month as more businesses reopened. That was the highest level since February 2020. The S&P Case-Shiller house price index jumped 12% in February y-o-y, after rising 11.2% in January. Additionally, a Reuters poll yesterday showed that analysts and traders have slashed their gold price forecasts, with many believing a return to last year`s record highs is unlikely, as the economic recovery tarnishes the safe-haven appeal of gold. A pickup in the US economy and progress with vaccination in the country have created headwinds for bullion.Gold is trading at $1,770/oz as we write, while US Treasury yields continue to rise. Investors are awaiting the Fed meeting today. The statement is likely to note that the economic situation in the US has improved, while Chairman Jerome Powell may indicate during his press conference the conditions he would like to see before the Fed can begin tapering its asset purchases. Also due today are a speech by ECB president Christine Lagarde and the US March print for wholesale inventories. We think gold may test $1,760/oz today, which opens a path to $1,745/oz, while we see a move above $1,785/oz as E BASE METAL PRICES ON THE RISE AMID ONGOING STOCKPILE DRAWSYesterday, the copper forward on the LME rose 1.1% to $9,856/tonne, nickel 1.8% to $16,963/tonne and zinc 0.4% to $2,926/tonne. Only aluminum fell, sliding 0.3% to $2,396/tonne on a pullback after having reached the highest price levels in three years. Base metals have been advancing amid falling stockpiles, down an average of 1.5% over the last calendar week. The continuing draws in stocks indicate that base metal consumption is outstripping output, meaning fundamental support for prices.Copper futures are up 10.7% over the last two weeks, and yesterday hit as high as $9,965/tonne, the highest level in a decade, but could not reach the $10,000/tonne threshold. Supporting prices are concerns about the copper concentrate supply from Chile and Peru, as well as the prospect of large-scale infrastructure spending in the US. Today, the strike of Chilean port workers is expected to end, which should put some pressure on copper prices, in our view. However, the risk of supply disruptions in Chile remains. In June, for example, negotiations on wages at Escondida, one of the world's largest copper mines (BHP), will begin, and new strikes could follow.Yesterday, palladium rose 0.6% to $2,945/oz, while platinum fell 1.2% to $1,231/oz. Today, the Fed decision is due. If hawkish signals are given, demand for platinum, where 20% of primary demand in 2020 came from investors, could take a