Commodities Daily - June 10, 2021

> Oil prices slide on downbeat EIA weekly inventory report. This morning, Brent has extended its losses to $71.50/bbl, with investors today primarily eying the US May CPI data, ECB rate decision and policy statement, US weekly jobless claims and monthly OPEC oil market report. In our view, today Brent could slide toward support at $70.90/bbl on what is expected to be a high US inflation print, which would boost the dollar, while a likely upbeat OPEC monthly report should limit the losses. Resistance today is $72.70/bbl.> Gold stabilizes ahead of US inflation data. Gold continued to hover near $1,890/oz yesterday despite the 10y Treasury yield easing to 1.48%. US wholesale inventories for April were in line with expectations. Bullion has edged down to $1,885/oz as we write. The market will today turn its attention to the US CPI for May, initial jobless claims and ECB policy meeting. We expect gold to retest support at $1,875/oz today, with a move above $1,900/oz looking unlikely to us.OIL PRICES SLIDE ON DOWNBEAT EIA WEEKLY INVENTORY REPORTIn the first half of the day yesterday, front-month Brent traded around the $72.50/bbl mark, where it held ahead of the much anticipated weekly EIA inventory report. Following the API's reported 2.11 mln bbl crude stock draw on Tuesday, the EIA yesterday registered a stronger w-o-w decrease of 5.24 mln bbl to 474.0 mln bbl. This came amid a 0.39 mln bpd increase in exports to 2.93 mln bpd and a 0.33 mln bpd increase in refinery inputs to 15.93 mln bpd. A 1.00 mln bpd increase in imports to 6.64 mln bpd and a 0.20 mln bpd increase in crude oil production proved insufficient to offset the overall draw. However, the refined product data was downbeat: gasoline stocks swelled 7 mln bbl to 241 mln bbl, while distillate stocks were up 4.4 mln bbl to 137.2 mln bbl, driven by higher refining activity and a weekly decrease in demand. Total commercial petroleum stockpiles (oil and refined products combined, excluding strategic petroleum reserves) surged by 15.5 mln bbl, also supported by a strong build in propane stocks. After the release, Brent slid to as low as $71.80/bbl, though it later pared some of these losses and eventually settled at $72.22/bbl, flat against the previous settlement.Refinery runs are rising in order to meet heightened fuel demand amid the summer driving season. For example, last week's build in gasoline stockpiles was the largest since April 2020, driven by gasoline imports, which topped 1 mln bpd for the seventh time in the past nine weeks. Meanwhile, the reported gasoline demand numbers disappointed - surprisingly given that the week included the US Memorial Day holiday - while the four-week rolling average on gasoline demand ticked lower for the first time in a month. Jet fuel demand fell 0.4 mln bpd w-o-w, even though traffic at airports has been climbing. In our view, the continuing glut of gasoline and distillates since the Colonial pipeline outage (especially in the US Gulf Coast) will dissipate in the weeks to come thanks to what we expect to be a strong rebound in demand after last week's disappointing numbers. Overall, we think that the drawdown in total stockpiles in the US will prevail through most of the summer and that total stockpiles should fall below the five-year average by the end of July, which would support prices. This morning, Brent has extended its losses to $71.50/bbl, with investors today primarily eying the US May CPI data, ECB rate decision and policy statement, US weekly jobless claims and monthly OPEC oil market report. In our view, today Brent could slide toward support at $70.90/bbl on what is expected to be a high US inflation print, which would boost the dollar (following the 4.2% y-o-y April print, headline inflation is forecast to accelerate to 4.7% y-o-y, with a 5.0% reading possibly triggering substantial gains in the greenback), while a likely upbeat OPEC monthly report should limit the losses. Resistance today is $72.70/bbl. LD STABILIZES AHEAD OF US INFLATION DATA Gold continued to hover near $1,890/oz yesterday despite the 10y Treasury yield easing to 1.48%. EUR/USD held steady at 1.218, which limited the movements in gold. The final US wholesale inventories reading for April was in line with expectations with a 0.8% rise and failed to impact bullion. The US 10y Treasury auction yesterday garnered significant interest, with a bid/cover ratio of 2.6, without a premium to the market. Gold is trading near $1,885/oz as we write ahead of US inflation data for May and the ECB meeting. These will be the last major data releases before next week's Fed meeting. The consensus for the CPI data is a 4.7% increase in y-o-y terms, which could feed concerns that the US regulator will commence monetary policy tightening sooner than expected. That would create a headwind for bullion. The ECB is widely expected to keep its monetary policy unchanged as higher borrowing costs would impact the eurozone's feeble economic recovery (compared with the US). This would likely push EUR/USD lower and could pressure gold. We expect gold to retest support at $1,875/oz today, with a move above $1,900/oz looking unlikely to