Commodities Daily - July 12, 2019

> Oil stabilizes amid bearish OPEC report, upbeat US economic data; IEA report and storm in Gulf of Mexico on the radar. This morning, Brent was paring back yesterday's losses. It moved close to $67/bbl amid reports that more than 1 mln bpd of oil production capacity was shut down in the Gulf of Mexico due to Tropical Storm Barry, which has been growing stronger and could turn into a hurricane. However, the monthly IEA report, which was just released, is likely to dampen the mood, as it shows the market currently in surplus despite the OPEC+ cuts. Eurozone industrial production, US PPI and Baker Hughes rig counts are also on the radar. Given the above, as well as data showing an 8.8% y-o-y increase in Chinese oil imports in 1H19, we think Brent is likely to hold above $66/bbl today.> Gold prices ease on US CPI and jobless claims data; US PPI in the spotlight. Yesterday's sharp gold price reaction to the Bureau of Labor Statistics report underlines the fact that gold prices are now primarily driven by Fed rate cut expectations. Today's release of the US PPI data will likely spur further volatility. The Bloomberg consensus expects the PPI excluding food and energy to slip to 2.1% y-o-y, from 2.3%, and for the m-o-m print to hold at 0.2%. If the data surprises to the upside gold might struggle to hold above $1,400/oz. Otherwise, we expect it to keep oscillating within the $1,400-1,410/oz range.