Commodities Daily - August 26, 2021

> Oil consolidates after rising on upbeat EIA report ahead of Jackson Hole Symposium. Today, investors will be on the lookout for any insight into whether the Fed is set to roll back its stimulus with the Jackson Hole meeting set to get underway. They will also take a peek at weekly US jobless claims and the second print of 2Q21 US GDP. In our view, market participants are likely to exhibit caution today, as the Fed may be set to provide more clues on its approach to tapering. We thus do not expect to see much support for risk assets, and we think Brent will likely stick to its current range around $72/bbl, as there is strong support at $70.7/bbl (the 100-day moving average) and resistance at $72.8/bbl (the 50-day moving average).> Gold under pressure ahead of Jackson Hole symposium. Gold slid from $1,800/oz to $1,790/oz yesterday, while the US 10y yield rose from 1.30% to 1.35%. Yesterday's macro releases created additional headwinds for bullion. Gold is trading near $1,790/oz as we write. Today, the market awaits the Jackson Hole Symposium, the second reading of US GDP for 2Q21, US weekly initial jobless claims and ECB meeting minutes. We expect bullion to try to test support at $1,775/oz today.OIL CONSOLIDATES AFTER RISING ON UPBEAT EIA REPORT AHEAD OF JACKSON HOLE SYMPOSIUMAt the start of the day yesterday, Brent was trading around $71/bbl. It attempted to rally to $72/bbl at one point, but it slipped back to $71.3/bbl ahead of the weekly EIA inventory report. Overall crude inventories dropped to pre-pandemic levels, falling 2.98 mln bbl to 432.56 mln bbl (a bigger than expected draw), the lowest level of crude stocks seen since January 2020. A decline in crude imports to the US Gulf Coast may have been the main reason for the draw, as exports were not stellar. US crude oil production, meanwhile, was stable at 11.4 mln bpd. The drop in crude stocks was definitely not caused by a boost in refining activity, as refinery inputs were steady near 16 mln bpd, although next week they could rise after some units come back online.Gasoline inventories posted a draw of 2.24 mln bbl, putting stockpiles at the lowest level since November. The draw stemmed mostly from the East Coast, which was partly the result of a reduced flow of imports from Europe and Canada. Gasoline demand showed little improvement during the final days of the summer driving season amid a spell of rainy weather across much of the country. There was also a surprise build in diesel inventories, which increased by 0.65 mln bbl, as refineries were stocking up on distillates ahead of the harvest season, while demand for trucking remained strong throughout the summer. The outlook for jet fuel did not improve, as inventories rose and demand was down. Jet fuel stockpiles rose by 1.4 mln bbl last week amid widespread flight cancellations.Following the report, Brent rallied all the way to $72.4/bbl, propelled mainly by the stronger than expected crude oil and gasoline stock draws. The front-month contract eventually settled at $72.25/bbl, $1.2/bbl above the previous settlement. This morning, Brent has slid below $72/bbl, as restrictions on mobility remain in place in many parts of the world due to the fast-spreading Delta variant. Furthermore, the EU is set to discuss today whether to re-impose curbs on visitors from the US, where new Covid cases are soaring. The US had 507 new Covid-19 cases per 100,000 inhabitants in the first two weeks of August, according to the European Center for Disease Prevention and Control, well above the limit of 75 set out in the EU guidelines. A move to bar visitors from the world's largest economy would come as a blow to airlines and travel firms, which have been pressing for a full reopening of lucrative transatlantic routes.Today, investors will be on the lookout for insight into whether the Fed is ready to roll back its stimulus with the Jackson Hole meeting set to get underway. They will also take a peek at weekly US jobless claims and the second print of 2Q21 US GDP. In our view, market participants are likely to exhibit caution today, as the Fed may be set to provide more clues on its approach to tapering. We thus do not expect to see much support for risk assets, and we think Brent will likely stick to its current range around $72/bbl, as there is strong support at $70.7/bbl (the 100-day moving average) and resistance at $72.8/bbl (the 50-day moving average) LD UNDER PRESSURE AHEAD OF JACKSON HOLE SYMPOSIUMGold slid from $1,800/oz to $1,790/oz yesterday while the 10y Treasury yield increased from 1.30% to 1.35%. EUR/USD rose from 1.176 to 1.177, limiting the downside for bullion. US durable goods orders for July showed a slight 0.1% decline, whereas the consensus had been for a 0.3% decrease after 0.9% growth in June. The data signaled that the cost of orders received by manufacturers for durable goods (meaning goods planned to last for three years or more) dropped slightly less than expected and the pace of US economic growth is better than expected. This created additional headwinds for bullion. Without other significant triggers investors await the Jackson Hole Symposium. Investors are taking a wait-and-see approach on expectations that Fed officials and Chairman Jerome Powell will provide some information about further progress in the tapering discussion. For now, the Fed's QE measures consist of $80 bln per month in Treasury purchases and $40 bln in MBS. Expectations of more details about the time line for tapering have created pressure on gold prices.Gold moved slightly below $1,790/oz in Asian trading today. Today, the market will be awaiting any comments related to the Jackson Hole Symposium, the second reading of US GDP for 2Q21, US weekly initial jobless claims and the ECB meeting minutes. The consensus for the US GDP second reading is 6.7% Q-o-Q annualized after a 6.5% first reading. Weekly initial jobless claims are expected at 350k. If the numbers turn out to be in line with the consensus - thus pointing to an improvement in the pace of the US economic recovery - it will likely push gold lower (as will expectations of tapering details from the Fed). We expect bullion to try to test support at $1,775/oz