Commodities Daily - December 19, 2019

> Oil rises on upbeat EIA inventory report; raft of US data on the radar. Today, investors will eye UK retail sales data and US releases including the current account, Philadelphia Fed business outlook survey and jobless claims at 16:30 Moscow time, and then existing home sales and the leading economic index at 18:00. We do not think that the data will rattle the oil market, although we note that trading should be thin ahead of the upcoming holidays, so we could see some volatility. In our view, Brent is likely to retreat to a touch below $66/bbl today as investors lock in profits ahead of the holidays following the $6/bbl rally this month.> Gold experiences volatility yesterday but closes flat. Gold was pressured by dollar strength in the afternoon but recovered fairly rapidly after the US House of Representatives voted to impeach Donald Trump. It closed flat on the day. Today, the market will be focused on US macro data (the Philadelphia Fed business activity index, initial jobless claims, existing home sales and the leading indicators). Yesterday, several Fed officials expressed optimism over the state of the US economy. If today's data exceeds consensus expectations, gold is likely to come under pressure again.OIL RISES ON UPBEAT EIA INVENTORY REPORT; RAFT OF US DATA ON THE RADARHaving fallen from $66.2/bbl to $65.8/bbl following a downbeat API inventory report overnight, front-month Brent continued to oscillate around the latter mark ahead of yesterday's EIA report. The EIA's stockpile data showed a 1.08 mln bbl decrease in US crude oil stocks to 446.8 mln bbl, which was less bullish than the Bloomberg consensus of a 1.75 mln bbl draw but stood in sharp contrast to the API's reported 4.7 mln bbl increase. The drawdown came amid a 0.3 mln bpd decrease in imports to 6.58 mln bpd and a 0.23 mln bpd increase in exports to 3.6 mln bpd (the highest level since October), with a slight 0.03 mln bpd decrease in refinery inputs to 16.56 mln bpd being insufficient to offset the total draw. US crude production remained flat at 12.8 mln bpd, after having fallen from a record high of 12.9 mln bpd at the start of the month. Also worth noting is that stocks at Cushing fell 0.26 mln bbl to 40.26 mln bbl, marking the sixth consecutive decrease since stockpiles peaked at almost 48 mln bbl in mid-November. Draws at Cushing are likely to continue through January thanks to relatively high activity at refineries along the Gulf Coast, which are fed from Cushing. This should support WTI against Brent.The refined product data was mixed, and the negatives were not enough to blunt the positive response to the crude drawdown. Total petroleum stocks (including oil but excluding strategic petroleum reserves) were down by 0.9 mln bbl. Gasoline stocks grew 2.5 mln bbl to 237.3 mln bbl and distillate stocks were up 1.5 mln bbl to 125.1 mln bbl. Draws in propane inventories, kerosene and "other oils" almost offset the builds in gasoline and distillates. Total refined product demand bounced back after flopping last week (due to adverse weather around the Thanksgiving holiday), with the four-week average remaining above the historical average for this time of the year. Following the report, Brent rose to a high of $66.43/bbl before eventually settling at $66.17/bbl, fixing $0.07/bbl above the previous settlement.Later in the day, the focus turned to the proceedings in Washington, where the Democrat-led US House of Representatives voted to impeach Republican President Donald Trump for abuse of power and obstruction of Congress. This, however, provided only weak headwinds to risk assets, as all House Republicans voted against impeachment, and since as many as 20 Republican votes will be required in the Republican-controlled Senate to convict and remove Trump from office. Today, investors will eye UK retail sales data and US releases including the current account, Philadelphia Fed business outlook survey and jobless claims at 16:30 Moscow time, and then existing home sales and the leading economic index at 18:00. We do not think that the data will rattle the oil market, although we note that trading should be thin ahead of the upcoming holidays, so we could see some volatility. In our view, Brent is likely to retreat to a touch below $66/bbl today as investors lock in profits ahead of the holidays following the $6/bbl rally this LD EXPERIENCES VOLATILITY YESTERDAY BUT CLOSES FLATYesterday saw little news in terms of macro statistics or regulatory statements. Chicago Fed President Charles Evans drew attention to the healthy outlook for the US economy and signaled his satisfaction with the median forecast for interest rates in 2020, which implies no change from the current level. New York Fed President John Williams said interest rates are in the right place but added that there is still uncertainty over global geopolitical and trade issues.Late in the afternoon Moscow time, gold came under pressure due to a strengthening dollar and a rise in US Treasury yields. It lost almost $9/oz, though it recovered fairly rapidly after the US House of Representatives voted to impeach Donald Trump. Gold closed flat on the day, but the impeachment process is being actively discussed among investors. Trump stands accused of abusing his power and obstructing a congressional investigation. The process now moves to the Senate, where Trump will face a trial. The chances of conviction are slim, as at least two thirds of senators (67) are required to vote for it. Republicans currently occupy 53 out of the 100 seats.Today, the market will be focused on US macro data (the Philadelphia Fed business activity index, initial jobless claims, existing home sales and the leading indicators). Yesterday, several Fed officials expressed optimism over the state of the US economy. If today's data exceeds consensus expectations, gold is likely to come under pressure again, though we see support at $1,465/