Commodities Daily - July 3, 2019

> Oil tumbles as current OPEC+ cuts seen as insufficient longer term amid slowing demand and surging US production; EIA data eyed. We think that the EIA data will show a crude oil draw of around 1-2 mln bbl (below the consensus and API estimate). How gasoline stocks turn out will be key for oil prices today, as this will indicate how strong end-user demand is during the high season. This, in turn, is an important indicator for gauging the severity of the economic downturn. Given the bullish consensus and bullish API data, expectations are upbeat going into the report. But the flipside of this is that there is more downside for oil prices if the EIA figures disappoint than upside if the data comes in bullish. We are therefore inclined to believe that Brent may well end up moving below the $62/bbl mark later today.> Speculative surge in gold prices on Trump's candidates for vacant Fed board posts. Donald Trump's having disclosed two candidates for the Fed board led to a dizzying rise in gold prices - from yesterday's $1,383-1385/oz level to $1,435/oz this morning, a gain of 3.75%. Prices have pared back somewhat to $1,423/oz as of this writing, however. Meanwhile, key EU posts were filled yesterday. Trade-war risks remain high amid new plans by the US to impose tariffs on Vietnamese steel. CBR Governor Elvira Nabiullina confirmed the bank's plans to encourage gold producers to export more.