Commodities Daily - August 25, 2021

> Oil extends gains ahead of the EIA weekly inventory report. This morning, Brent dipped below $71/bbl despite the API having shown a small weekly draws in oil (-1.62 mln bbl), gasoline (-0.985 mln bbl) and distillates (-0.245 mln bbl) stocks, and as Covid-19 continues to spread across other regions like Australia, Japan and Thailand. Today, investors are eying the EIA weekly inventory update and US July durable goods orders data. The former is likely to be upbeat, supporting Brent toward yesterday's high at $71.3/bbl, while its 50-day moving average, which is at $72.8/bbl, seems to be too distant of a target for now (the 100-day moving average, which is at $70.6/bbl, now serves as support).> Gold edges lower ahead of Jackson Hole Symposium. Gold inched lower from $1,805/oz to $1,800/oz yesterday. Meanwhile, the 10y Treasury yield rose from 1.25% to 1.30% and EUR/USD advanced slightly from 1.175 to 1.176. The macro data looked positive for gold; however, Fed Chairman Powell and other officials are expected to provide further guidance on tapering the bond-buying program at the upcoming Jackson Hole Symposium, which has pressured bullion and prevented it from reacting with gains to the latest economic data. During the Asian session today, gold has moved lower to $1,795/oz amid dollar strengthening. Today, the market awaits US durable goods orders for July. We expect bullion to try to test support at $1,790/oz today.OIL EXTENDS GAINS AHEAD OF THE EIA WEEKLY INVENTORY REPORTYesterday, front-month Brent rallied around $2.7/bbl toward $71.3/bbl amid a vast amount of Mexican oil production remaining offline after Sunday's fire on an oil platform that wiped out more than 0.4 mln bpd of the nation's output. Production from some of the 125 wells taken offline has already restarted. Thirty-five wells are already producing 0.071 mln bpd and the company plans to resume output of an additional 0.11 mln bpd in the next 36 hours, the Pemex CEO said yesterday. The company plans to resume full crude production by Monday. Meanwhile, after rapidly bringing local virus cases down to zero, China is already showing signs of a road traffic recovery (congestion in Beijing rose 11.8% as of mid-morning on Tuesday compared with a week earlier). The Ningbo Port, one of the busiest in the world, has also been reopened after a two-week shutdown. Yesterday, Brent eventually settled at $71.05/bbl, $2.3/bbl above the previous settlement.As we noted previously, the crude stocks of Chinese oil majors are very low and once restrictions ease and the government wraps up inspections and finalizes punishments of smaller private refineries (the government is keeping a close eye on misuse of imported crude and illegal trading of import quotas), crude oil imports will pick up yet again. In addition to boosting oil prices in general, this will support the Dubai benchmark against Brent and lead to a stronger backwardation in Brent. Also noteworthy is that this week's rally has already coincided with a sharp strengthening in calendar spreads, which indicates stronger spot market demand. The difference between the nearest two December Brent futures contracts (December 2021 and December 2022) jumped by $1/bbl in the past two days. Furthermore, recent gains in the global benchmark (Brent) led to its premium to WTI increasing from $2.9/bbl to $3.6/bbl currently.This morning, Brent dipped below $71/bbl despite the API having shown small weekly draws in oil (-1.62 mln bbl), gasoline (-0.985 mln bbl) and distillates (-0.245 mln bbl) stocks and as Covid-19 continues to spread across other regions like Australia, Japan and Thailand, prompting restrictions on mobility. Today, investors are eying the EIA weekly inventory update and US July durable goods orders data. The former is likely to be upbeat, supporting Brent toward yesterday's high at $71.3/bbl, while its 50-day moving average, which is at $72.8/bbl, seems to be too distant of a target for now (the 100-day moving average, which is at $70.6/bbl, now serves as support) LD EDGES LOWER AHEAD OF JACKSON HOLE SYMPOSIUM Gold inched lower from $1,805/oz to $1,800/oz yesterday. Meanwhile, the 10y Treasury yield rose from 1.25% to 1.30% and EUR/USD advanced slightly from 1.175 to 1.176. The macro data looked positive for gold. US new home sales for July rose a modest 1.0% versus the consensus of a 3.1% expansion. In addition, the Richmond Fed manufacturing index for August was reported at nine points versus the 24-point consensus forecast, reaching its lowest point in a year. Overall, the latest data suggests a slowdown in the US economic recovery. However, investors are currently awaiting the Fed's annual Jackson Hole Symposium, which is set to kick off tomorrow. Fed Chairman Jerome Powell is due to speak on Friday. Powell and other Fed officials are expected to provide further guidance on tapering the bond-buying program - this has pressured bullion prices and prevented gold from advancing on the latest economic data. As for the situation with Covid-19 in the US, new daily cases fell to the 150k mark yesterday, near the seven-day MA. During the Asian session today, gold has moved lower to $1,795/oz amid dollar strengthening. Today, the market awaits US durable goods orders for July. We think that, though the market consensus is downbeat, suggesting a 0.3% decline in July after a 0.9% rise in June, gold will likely remain under pressure ahead of Jackson Hole tomorrow. We expect bullion to try to test support at $1,790/oz