Commodities Daily - August 26, 2020

> Oil advances as Hurricane Laura nears US Gulf Coast; EIA inventory data looming. Ahead of the EIA inventory report today, investors will be digesting US July durable goods orders, which we think are likely to continue to reflect a solid rebound from the deep shock of 2Q20, providing fleeting support for oil. With regard to the EIA inventory report, we expect a crude oil stock draw of around 3 mln bbl, with the main focus remaining on the refined product data. We think a strong gasoline draw similar to the one reported by the API is unlikely, and we think the EIA numbers could even surprise to the downside, as the US driving season is drawing to a close. We therefore see a high chance of Brent testing support at $45.4/bbl following the EIA numbers. Should the EIA data surprise to the upside and Hurricane Laura gather more strength, we think Brent would climb into the $46.6-47.3/bbl technical range.> Gold market quiet ahead of Powell speech at Jackson Hole tomorrow. Besides short-lived pressure from better than expected US macro data, gold generally traded flat yesterday and closed at $1,928/oz. We expect it to be range-bound again today, trading at $1,910-1,935/oz ahead of Fed Chairman Jerome Powell's speech at the Jackson Hole symposium tomorrow.OIL ADVANCES AS HURRICANE LAURA NEARS US GULF COAST; EIA INVENTORY DATA LOOMINGBrent was trading just below the $45.3/bbl mark yesterday morning before climbing toward $46/bbl. It eventually settled at $45.86/bbl, up $0.73/bbl on the day. The initial predictions for Hurricanes Marco and Laura had suggested that more production would be shut than refining capacity, but Hurricane Laura has now veered west and increased in forecast severity to a Category 3 storm. Oil producers have shut 1.56 mln bpd of output (close to the 90% outage that Hurricane Katrina caused 15 years ago), while 3.8 mln bpd of refining capacity is now at risk of being shut. We think the latest information suggests that the substantial drop in refining demand will pressure pipe flows out of Cushing, causing oil stock builds there and widening the WTI-Brent spread. Hurricane Laura is also mildly bullish for Brent calendar spreads, as it is likely to delay US crude exports. Vast refinery shutdowns have also led to markets pricing in a possible strong near-term gasoline shortage, though the reaction on the diesel market has remained muted so far.Overnight, the API reported that US crude stocks fell 4.5 mln bbl to 507.5 mln bbl last week (versus the EIA's latest figure of 512.4 mln bbl). The draw came amid a 0.15 mln bpd increase in refinery runs and despite a 0.14 mln bpd increase in imports. Crude stocks at Cushing fell 0.6 mln bbl. The refined product data was mostly upbeat, showing a strong 6.4 mln bbl draw in gasoline stocks and a 2.3 mln bbl increase in distillate inventories. Investors are now positioning for the EIA inventory report today at 17:30 Moscow time. The Bloomberg consensus is calling for a 2.58 mln bbl crude stock draw, a 1.75 mln bbl decrease in gasoline inventories and a 0.05 mln bbl decline in distillate stocks. Ahead of the EIA inventory report today, investors will be digesting US July durable goods orders, which we think are likely to continue to reflect a solid rebound from the deep shock of 2Q20, providing fleeting support for oil.With regard to the EIA inventory report, we expect a crude oil stock draw of around 3 mln bbl, with the main focus remaining on the refined product data. We think a strong gasoline draw similar to the one reported by the API is unlikely, and we think the EIA numbers could even surprise to the downside, as the US driving season is drawing to a close. Hurricane disruptions will not affect this report, which covers the week to August 21. We therefore think there is a high risk that today's data will derail what appeared to be a steady decline in total US oil and refined product stockpiles, which would weigh on prices. We therefore see a high chance of Brent testing support at $45.4/bbl following the EIA numbers. Should the EIA data surprise to the upside and Hurricane Laura gather more strength, we think Brent would climb into the $46.6-47.3/bbl technical LD MARKET QUIET AHEAD OF POWELL SPEECH AT JACKSON HOLE TOMORROWGold prices were mostly stable yesterday in a $1,915-$1,937/oz range, besides a short-lived drop at the beginning of the US session, when they reached an intraday low of $1,915/oz in the wake of US economic data. July new home sales came in better than expected (901k versus 790k) and rose m-o-m (from 791k). Meanwhile, the Richmond Fed manufacturing index rose from 10 to 18 points in August (versus the consensus of 10). Gold prices rebounded within a few hours and ended the day flat at $1,928/oz. Gold opened lower this morning and is quoted back at $1,915/oz as we write. We expect prices to be range-bound again today, trading at $1,910-1,935/oz ahead of Fed Chairman Jerome Powell's speech at the Jackson Hole symposium tomorrow. Today's main event in markets will be US durable goods orders for