Commodities Daily - August 30, 2021

> Oil prices rise as Hurricane Ida disrupts oil and refined product supplies; busy week ahead. Today, investors will primarily eye eurozone consumer confidence for August. We think Brent will likely continue hovering just above its 50-day moving average of $72.8/bbl and possibly retest today's high at $73.7/bbl. The focus later this week will be on the OPEC+ meeting and US nonfarm payrolls data for August. > Gold rallies after Powell's speech. Gold rose sharply from $1,790/oz to $1,820/oz on Friday, while the 10y US Treasury yield slid from 1.35% to 1.30%. Fed Chairman Jerome Powell sent slightly dovish signals to markets during his keynote speech at Jackson Hole. Gold is trading near $1,815/oz as we write. Today, markets await US pending home sales data for July and the Dallas Fed manufacturing index for August. We expect bullion to remain range-bound at $1,800-1,830/oz.OIL PRICES RISE AS HURRICANE IDA DISRUPTS OIL AND REFINED PRODUCT SUPPLIES; BUSY WEEK AHEADOn Friday, front-month Brent gained almost $1.6/bbl, rising toward $72.8/bbl as oil producers in the US Gulf of Mexico began shutting production ahead of Hurricane Ida. Meanwhile, at the Jackson Hole Symposium Fed Chairman Jerome Powell signaled that pandemic-era policy support will be withdrawn cautiously and gradually but did not give a specific timeline for scaling back the stimulus. Powell sounded a note of caution about employment levels and stuck to the message that the current bout of inflation is due in part to supply-chain disruptions brought on by Covid-19 and is likely to be transitory. Markets took the speech in stride, with risk assets rallying along with US stocks, which advanced to another record high, while Treasury yields and the dollar fell. In our view, it is only a matter of time until the Fed provides certainty over its path to easing monetary support. When this does happen, it will be negative for risk assets. Accordingly, risk-off moves following the Fed's September and November meetings are likely. Brent eventually settled at $72.7/bbl, $1.63/bbl above the previous settlement.This morning, Brent rallied toward $73.7/bbl before later easing below $73/bbl after Hurricane Ida barreled ashore in Louisiana, disrupting energy supplies in the world's largest economy at a time of rising commodity prices. This has spurred refiners and pipeline networks to suspend operations, possibly for weeks. Oil production in the Gulf of Mexico is very likely to return to pre-hurricane operation much more quickly than the refining sector, implying that in the weeks to come this is negative for crude oil and positive for refined products as end-user demand remains solid despite now easing slightly on seasonal factors and amid rising US coronavirus cases. Today, investors will primarily eye eurozone consumer confidence for August. We think Brent will likely continue hovering above its 50-day moving average of $72.8/bbl and possibly retest today's high at $73.7/bbl. The focus later this week will be on the OPEC+ meeting and US nonfarm payrolls data for August. The cartel's midweek meeting on supply policy comes amid expectations of a further relaxing of output curbs, with traders also focusing on disruptions triggered by Hurricane Ida. China's August PMI data will shed light on the prospects for raw material demand, while Friday's US nonfarm payrolls data, if upbeat, could weigh on risk assets in general, as it would point to the Fed's September meeting as potentially being hawkish. We think Brent will struggle to push all the way toward $75/bbl this week and that it will stick near its 50-day moving average for the time LD RALLIES AFTER POWELL'S SPEECHGold rallied after Fed Chairman Jerome Powell's speech on Friday. It rose from $1,790/oz to $1,820/oz on the day, while the 10y US Treasury yield slid from 1.35% to 1.30%. Meanwhile, EUR/USD edged up from 1.170 to 1.180, creating tailwinds for bullion. Powell indicated that the Fed could start tapering QE this year. However, he did not provide any further clues on the timeline or on the pace of tapering. He also reiterated his view that the pickup in inflation is transitory and has been driven primarily by a narrow group of goods. In addition, he mentioned that it would be some time before the first rate hike and that the risks posed by the Delta variant still needed to be evaluated. Markets found his comments slightly dovish, as many investors had expected hints at a shorter timeline for QE tapering. Powell's speech therefore helped push gold beyond its 50-day and 100-day moving averages. On the macro data front, the US PCE index for July printed at 0.4% in m-o-m terms, in line with expectations, and 4.2% in y-o-y terms, slightly above the 4.1% expected. Personal income rose 1.1% m-o-m, versus an expected 0.3% rise, while personal spending increased by 0.3%, versus an expected 0.4% increase. Gold has been trading near $1,815/oz this morning. Today, the market awaits US pending home sales for July and the Dallas Fed manufacturing index for August. The macro calendar for the rest of the week features the ADP August employment report on Wednesday and the official US jobs report on Friday. The US will also publish June housing price data, the July reading of the Chicago purchasing managers index, the August reading of the consumer confidence index, August PMI readings from IHS Markit and ISM, construction spending data for July and weekly initial jobless claims. The eurozone will see August CPI, July PPI, July retail sales and August IHS Markit PMIs. We expect bullion to remain range-bound at $1,800-1,830/oz