Commodities Daily - July 24, 2019

> Oil up on resumption of US-China in-person trade talks and bullish API data, despite bearish IMF report; EIA data on the radar. We think that today's EIA data will show a crude oil draw of around 5 mln bbl (more than the consensus but much less than the API estimate) and an increase in refined product stocks. Key for prices today will be whether the crude drawdown exceeds the buildup in refined products. Aside from the EIA report, releases today include US preliminary July PMI data, as well as US new home sales. In our view, Brent is likely to approach $65/bbl later in the day today and possibly even break above this level on upbeat PMI and EIA data.> Gold steady as geopolitical uncertainty and rate cut expectations counterbalance stronger dollar. As we write, weaker than expected PMI data from Germany (its industrial sector is now in a deep contraction) and the eurozone is weighing on EUR/USD, while gold is climbing (which is not typical for a dip in EUR/USD) toward the $1,425/oz mark after hovering just above $1,415/oz earlier today. This is because the market sees the weaker data as strengthening the case for monetary policy easing by the ECB at its meeting tomorrow. Today, investors will also get preliminary July PMI data and new home sales from the US. We think the US data is likely to be fairly upbeat and thus weigh on gold prices via a stronger dollar, as it will dim the prospects of aggressive Fed rate hikes. We therefore expect gold to continue hovering just above the $1,420/oz mark today.