Commodities Daily - August 13, 2020

> Oil advances on weaker dollar, stock market rally and upbeat EIA data; IEA report on the radar. Today, oil investors will be digesting the IEA monthly report, which will out before you receive this and will likely set the tone for the day. We maintain our view that Brent will rise toward $46.2/bbl technical resistance this week (breaking through $45.5/bbl resistance on its way), which in the medium term could take it to the $47.4-49.2/bbl technical range. But the ride to the new highs is likely to be choppy, and we do not rule out a brief retreat to $44.7/bbl, with downbeat takeaways from today's IEA report possibly providing these headwinds.> Gold stabilizes after strong correction looking for further direction. Gold currently finds itself stuck in a range of $1,913-1,943/oz and is equally likely to begin paring back this week's losses as to continue correcting. We continue to reiterate that after this correction gold is likely to resume appreciating. Today, investors will eye US initial jobless claims data, which are likely to extend their recent downtrend, as the expiration of the weekly $600 top-up in federal benefits may have discouraged some Americans from filing for unemployment benefits. This is likely to provide support to the dollar and thus keep gold close to the $1,920/oz pivot point for now.OIL ADVANCES ON WEAKER DOLLAR, STOCK MARKET RALLY AND UPBEAT EIA DATA; IEA REPORT ON THE RADARFront-month Brent began to generate positive momentum early yesterday along with S&P 500 futures and EUR/USD. All of these assets reversed losses sustained late Tuesday. Before the EIA inventory report oil investors were digesting the OPEC monthly report, which defied our expectations by showing a 0.09 mln bpd m-o-m downgrade to global oil demand estimates this year (now expected to average 90.63 mln bpd). Demand for OPEC crude for this year was lowered by 0.44 mln bpd, which also comes amid a 0.35 mln bpd upward revision to non-OPEC supply. This view also implies that OPEC+ has put itself in a risky position by starting to gradually increase production in August. Ahead of the EIA report Brent gained $0.7/bbl to $45.2/bbl. The report showed a third consecutive drop in crude oil stocks (the first instance of three consecutive drops this year) of 4.5 mln bbl to 514 mln bbl (the lowest level since early April). This stemmed from a strong 0.3 mln bpd decrease in US crude oil production to 10.7 mln bpd, a 0.002 mln bpd increase in refinery inputs to 14.66 mln bpd, a 0.39 mln bpd decrease in imports to 5.6 mln bpd and a 0.32 mln bpd rise in exports to 3.14 mln bpd. Inventories at Cushing, the WTI delivery hub, rose by 1.3 mln bbl to 53.3 mln bbl. The refined product data was also upbeat, showing gasoline stocks edging down 0.72 mln bbl to 247.08 mln bbl (although this left many who expected a stronger decrease disappointed) and distillate stocks drawing 2.3 mln bbl to 177.6 mln bbl. Total commercial petroleum stockpiles (oil and refined products combined, excluding strategic petroleum reserves) fell by 6.15 mln bbl. After stabilizing in July, total US commercial stockpiles are now finally beginning to slide, as total demand for all products is slowly creeping higher (although still down 12% from the five-year average level for the time of year) amid fairly restrained oil and refined product supplies. Signs of a further recovery in demand in the world's largest economy buoyed optimism, with Brent eventually settling at $45.43/bbl, fixing $0.93/bbl above the previous settlement. It is important to highlight that Brent is getting closer to breaking above its 200d moving average (WTI has already done so), which is one of the signs that it could break out of the tight range it's been trading in for the last couple of months.Today, oil investors will be digesting the IEA monthly report, which will be out before you receive this and will likely set the tone for the day. Later today market players will pay particularly close attention to the US initial jobless claims report. We maintain our view that Brent will rise toward $46.2/bbl technical resistance today or tomorrow (breaking through $45.5/bbl resistance on its way), which in the medium term could take it to the $47.4-49.2/bbl technical range. But the ride to the new highs is likely to be choppy, and we do not rule out a brief retreat to $44.7/bbl, with downbeat takeaways from today's IEA report possibly providing these LD STABILIZES AFTER STRONG CORRECTION, CURRENTLY LOOKING FOR FURTHER DIRECTIONAfter plummeting $160/oz on Tuesday and Wednesday morning (briefly even managing to break below $1,870/oz), gold prices began to swiftly pare back losses. Some attributed this reversal to the very downbeat economic data from the UK released early yesterday. With tailwinds from the weakening dollar, which began to reverse course after strengthening on Tuesday, bullion approached the $1,950/oz mark. There were also headwinds from data showing US consumer prices rising more than expected in July amid broad gains in the cost of goods and services. However, gains in EUR/USD supported gold back toward $1,950/oz, which proved tough to break through. As tailwinds from the weaker dollar abated gold slid to $1,910/oz later in the day. This correction late in the US session was also attributable to US stocks briefly surpassing their all-time high as investors reallocated to equities and away from safe-haven assets.Gold currently finds itself stuck in a range of $1,913-1,943/oz and is equally likely to pare back this week's losses as it is to continue correcting (this correction is largely viewed as technical, as gold was strongly overbought for a long time). We continue to reiterate that after this correction gold is likely to resume appreciating. However, at this moment it is at something of a crossroad: a rise above $1,949/oz could signal a push further toward $1,968-1,993/oz, while a fall below $1,907/oz could extend to $1,864/oz. Today, investors will eye US initial jobless claims data, which are likely to extend their recent downtrend, as the expiration of the weekly $600 top-up in federal benefits may have discouraged some Americans from filing for unemployment benefits. This is likely to provide support to the dollar and thus keep gold close to the $1,920/oz pivot point for