Commodities Daily - July 9, 2020

> Oil prices steady with gasoline only bright spot in downbeat EIA report. Today looks set to be rather uneventful besides US initial jobless claims, which will be released at 17:30 Moscow time. We see the chances of a strong, upbeat reading that would boost risk assets as rather low, as climbing case numbers present downside risks to the nascent labor market recovery. Investors continue to await European stimulus measures, while downbeat global coronavirus news flow still presents downside for risk appetite. We think that Brent will remain in its recent $42.7-43.5/bbl technical range today, with an escape suggesting a direction.> Gold gains fresh impetus and consolidates above $1,800/oz. We continue to recommend buying gold in both dollars and in rubles in light of elevated investment demand for the metal and dovish rhetoric from US Federal Reserve officials. Today, the focus will be on US initial jobless claims for the week to July 4 (15:30 Moscow time). We expect gold to make further gains this afternoon, with the next resistance at $1,818/oz.OIL PRICES STEADY WITH GASOLINE ONLY BRIGHT SPOT IN DOWNBEAT EIA REPORTYesterday, Brent continued to trade in its recent $42.7-43.5/bbl technical range, with investors focusing primarily on the EIA inventory report, which ended up indicating a strong 5.65 mln bbl build in US crude stocks to 539.2 mln bbl. This came amid a 1.4 mln bpd increase in US imports to 7.4 mln bpd and a 0.7 mln bpd decrease in exports to 2.4 mln bpd. A 0.3 mln bpd increase in refinery inputs to 14.3 mln bpd proved insufficient to offset the overall build. US crude production, meanwhile, remained steady at 11 mln bpd. Inventories at Cushing, the WTI delivery hub, increased for the first time since early May by 2.2 mln bbl to 47.8 mln bbl. The refined product data was also bearish by and large, apart from gasoline stocks falling a strong 4.84 mln bbl to 251.7 mln bbl amid higher demand (climbed to 8.8 mln bpd, the highest since March 20) offsetting the increase in refining. The recovery in gasoline demand resumed last week despite surging infection rates in key US travel destinations such as Florida and California. Summer driving demand is still lower than normal, but it is certainly moving in the right direction. Distillate stocks, however, were reported to have risen 3.1 mln bbl to 177.2 mln bbl. Total commercial petroleum stockpiles (oil and refined products combined, excluding strategic petroleum reserves) were up yet again, rising a strong 9.8 mln bbl, largely due to an increase in the propane/propylene and "other oils" categories. Brent eventually settled at $43.29/bbl, fixing $0.21/bbl above the previous settlement. Today looks set to be rather uneventful besides US initial jobless claims, which will be released at 17:30 Moscow time. We see the chances of a strong, upbeat reading that would boost risk assets as rather low, as climbing case numbers present downside risks to the nascent labor market recovery. California and Texas have recorded some of their biggest daily gains in new cases and deaths (more than 60,000 new cases were reported across the US yesterday, the highest recorded anywhere across the globe since the pandemic started). Globally, Iran has reported its deadliest day yet and Melbourne went into lockdown. Despite this, European stock futures are pointing to a positive open today following gains in Asia, as investors continue to await further European economic stimulus measures. Also in the headlines is the UK government laying out a stimulus plan in response to Covid-19, German Chancellor Merkel encouraging the EU to come to an agreement on a recovery plan and Italy's finance minister saying the country would tap the euro-area bailout fund if needed. Given the mix of factors at play, we think that Brent will remain in its recent $42.7-43.5/bbl technical range today, with an escape suggesting a direction. A break below $42.7/bbl is likely to cause a fall toward the $41.8/bbl technical support, while a break above $43.5/bbl could put Brent in the $44.1-44.7/bbl technical range. Note that trading volumes for Brent have slumped recently, in contrast to the frantic activity seen earlier this year. In our view, this is because investors are unconvinced that oil prices are going anywhere while Covid-19 and its damage to oil demand remain in the background. LD REGAINS IMPETUS AND CONSOLIDATES ABOVE $1,800/OZGold continued to rally yesterday. This week, support has come from several Fed speakers confirming the regulator's intention to stick to a soft monetary policy to stabilize the economy. Boston Fed Chairman Eric Rosengren said yesterday that the recovery could proceed much slower than expected, while Atlanta Fed Chairman Rafael Bostic noted that fresh coronavirus outbreaks in several states have raised questions over the restoration of business activity. These comments provided a shot in the arm for gold, which was trading in a $1,815-1,818/oz range during US trading hours yesterday and closed 0.8% higher.Today, the focus will be on US initial jobless claims for the week to July 4 (15:30 Moscow time). This week has seen the emergence of the second wave of the coronavirus in the US, so the numbers could be set to come in above the consensus forecast and provide further impetus for gold. The next resistance is at $1,818/