Commodities Daily - August 6, 2020

> Oil prices rise on weaker dollar; US initial jobless claims and Saudi September OSPs on the radar. Today, investors will pay particularly close attention to the US initial jobless claims report, which is sandwiched between Wednesday's ADP and Friday's monthly jobs reports. Meanwhile, the latest Bloomberg report suggests that Saudi Aramco will release its official selling prices (OSPs) for September today. If the prices rise or even decrease by less than the market expects, it would be a very clear bullish signal from the Saudis that they want to keep exports in check, which would be a strong price-supportive factor. We think Brent is likely to retest technical resistance at $46.1/bbl today, with a break above it opening a path to the next resistance level of $46.7/bbl. > Gold continues to climb to new heights amid weak US jobs data, reported progress in US stimulus talks. Today, US Democrats and Republicans will meet to try to hammer out the details of the long-awaited stimulus bill. However, there have been reports that President Trump is considering issuing an executive order that would unilaterally impose a stimulus plan of his own. The dollar continues to weaken, which is supporting precious metals prices. We could see gold press higher to a test of technical resistance at $2,055/oz today.OIL PRICES RISE ON WEAKER DOLLAR; US INITIAL JOBLESS CLAIMS AND SAUDI SEPTEMBER OSPS ON THE RADARDuring the first half of the day yesterday, Brent climbed nearly $2/bbl to $46.2/bbl amid a weakening dollar (oil prices closely mirrored moves in EUR/USD yesterday) and prevailing risk appetite. This momentum came on the back of the IHS Markit July PMI data showing eurozone business activity (the composite PMI reading) returning to modest growth in July, as some curbs imposed to stop the spread of the coronavirus were lifted. Note, however, that the recovery in the important service industry came in slightly below expectations. A much weaker than expected US ADP jobs report overshadowed a very upbeat ISM nonmanufacturing PMI reading for July, providing additional headwinds to the dollar. Meanwhile, US lawmakers remain at an impasse on the next steps of fiscal support, which is one of the reasons the global rally plateaued during the US session.Brent was hovering just below $46/bbl ahead of the EIA inventory report. The report showed yet another strong 7.37 mln bbl drop in crude oil stocks to 518 mln bbl. This stemmed from a 0.1 mln bpd decrease in US crude oil production to 11.0 mln bpd and a 0.04 mln bpd increase in refinery inputs to 14.64 mln bpd. Somewhat surprisingly, a 0.86 mln bpd increase in imports to 6 mln bpd and a 0.4 mln bpd decrease in exports to 2.82 mln bpd were insufficient to offset the overall draw. Inventories at Cushing, the WTI delivery hub, rose by 0.53 mln bbl to 51.95 mln bbl. However, the refined product data was slightly downbeat, showing gasoline stocks edging up 0.42 mln bbl to 247.8 mln bbl and distillate stocks expanding 1.59 mln bbl to 180 mln bbl. Amid the large crude oil draw, total commercial petroleum stockpiles (oil and refined products combined, excluding strategic petroleum reserves) fell by 2.1 mln bbl. Total US commercial stockpiles had been posting very strong builds since mid-March, but they stabilized in July and are now beginning to slide, though demand remains too weak to ensure consistent draws across all categories, despite fairly restrained oil and refined product supplies. Yet again the main highlight of the report was not the large crude oil stock draw, but the stagnating gasoline demand, which remains 10% below y-o-y levels. Investors worry that with only five weeks to go before Labor Day, there is little time left in the summer driving season for consumption to rise. This was partially the reason why Brent slid later in the day, eventually settling at $45.17/bbl, up $0.74/bbl on the day.Today, investors will pay particularly close attention to the US initial jobless claims report, which is sandwiched between Wednesday's ADP and Friday's monthly jobs reports. Meanwhile, the latest Bloomberg report suggests that Saudi Aramco will release its official selling prices (OSPs) for September today. If the prices rise or even decrease by less than the market expects, it would be a very clear bullish signal from the Saudis that they want to keep exports in check, which would be a strong price-supportive factor. We think Brent is likely to retest technical resistance at $46.1/bbl today, with a break above it opening a path to the next resistance level of $46.7/ LD CONTINUES TO CLIMB TO NEW HEIGHTS AMID WEAK US JOBS DATA, REPORTED PROGRESS IN US STIMULUS TALKSGold extended its rally yesterday, though volatility remained rather high. After trading around $2,010/oz in the morning, gold prices shot up around $44/oz to a new record intraday high, following a far weaker than expected US private payrolls print from ADP (167k jobs added in July, versus an expected 1.2 mln and 4.3 mln in June). Gold later ran into headwinds from an upbeat July reading of the ISM nonmanufacturing gauge (58.1, above the expected 55) and finished the day 0.9% higher at $2,038/oz. Gold prices have been finding fundamental support from reports of progress being made in the political wrangling over the next round of fiscal stimulus in the US. Today, US Democrats and Republicans will meet to try to hammer out the details of the long-awaited stimulus deal. However, there have been reports that President Trump is considering issuing an executive order that would unilaterally impose a stimulus plan of his own.Today's highlight data-wise is US weekly jobless claims at 15:30 Moscow time. We believe gold could press higher to a test of technical resistance at $2,055/oz