Commodities Daily - June 15, 2020

> Oil prices under pressure amid global risk-off mood. This morning, Brent is hovering above $37.5/bbl, with support coming from data published by China's National Bureau of Statistics showing a strong increase in refining throughput to 13.63 mln bpd in May from 13.1 in April, highlighting the rise in demand for motor fuels. Later today, investors will eye the EIA's monthly Drilling Productivity Report, which will contain the agency's US shale output estimates for July. In our view, Brent is unlikely to break below the nearest technical support level of $37.1/bbl today. However, if risk-off trading continues in global markets, it could drop to as low as $36.2/bbl.> Gold down from post-Fed highs after volatile end to week. Gold is trading at $1,720/oz as we write this morning, down 1.5% from its high of $1,745 following the Fed decision. The latest CFTC data showed that hedge funds trimmed their long positions in gold, though short positions increased only slightly, which meant the balance remained practically the same. Today, there is not much in the way of major data besides the latest New York Empire State manufacturing index. Dallas Fed President Robert Kaplan will speak at 17:30 Moscow time, followed by San Francisco Fed President Mary Daly at 19:30.> Base metals under pressure despite encouraging Chinese macro data. So far today, risk assets remain under pressure from second wave worries and weaker than expected but still promising Chinese economic data for May, published this morning. Industrial production and retail sales improved compared to April, but fell short of optimistic expectations. As we write the 3m contract on copper is trading 1.6% lower, while nickel is down 1.0% and aluminum off 0.9%.OIL PRICES UNDER PRESSURE AMID GLOBAL RISK-OFF MOODAfter sliding from $41/bbl to $38/bbl on Thursday and then dropping to as low as $37/bbl early on Friday, front-month Brent began to pare back its losses and later in the day was trading close to $39/bbl. It eventually settled at $38.73/bbl, fixing $0.18/bbl above the previous settlement. The center of the global market retreat on Thursday was the US, where the S&P 500 plummeted, wiping out more than two weeks of gains, with oil prices closely tracking the move downward. Reactions to headlines suggesting a second wave of Covid-19 is already emerging across a number of US states sent markets lower. These concerns were only compounded by the growing divergence between weak macro signals and rising stock markets, which has pushed valuations to multi-decade highs. More than 25,000 new Covid-19 cases were reported in the US on Saturday alone, while a cluster of infections in Beijing has raised concerns of a resurgence of the virus in China.Over the weekend, there were also upbeat reports that Iraq had agreed with major international oil companies on even deeper crude production cuts in June, with Lukoil reportedly set to cut another 0.05 mln bpd and ExxonMobil another 0.07 mln bpd. This is a very positive sign, as it comes ahead of the OPEC+ Joint Technical Committee and Joint Ministerial Monitoring Committee meetings this week. According to Reuters, on Thursday the OPEC-led monitoring panel will discuss the ongoing record production cuts and determine whether countries have delivered their share of the reduction, but it will not make any decisions. However, a recommendation to extend the current cuts through August may still be in the cards and would be a rather bullish surprise if announced later this week.This morning, Brent is hovering above $37.5/bbl, with support coming from data published by China's National Bureau of Statistics showing a strong increase in refining throughput to 13.63 mln bpd in May from 13.1 in April, highlighting the rise in demand for motor fuels. China's overall industrial output was up for a second straight month in May, though less than expected, suggesting that the economy is still struggling to get back on track after the coronavirus crisis. Meanwhile, retail sales and investment continued to contract. Later today, investors will eye the EIA's monthly Drilling Productivity Report, which will contain the agency's US shale output estimates for July. In our view, Brent is unlikely to break below the nearest technical support level of $37.1/bbl today. However, if risk-off trading continues in global markets, it could drop to as low as $36.2/ LD DOWN FROM POST-FED HIGHS AFTER VOLATILE END TO WEEKThursday's risk selloff led to a strengthening of the dollar through the end of last week, and the gains have continued this morning on reports that could suggest a second wave of the coronavirus beginning in China and Japan. Against this backdrop, gold has been under pressure. It is trading at $1,720/oz as we write this morning, down 1.5% from its high of $1,745 following the Fed decision. The latest CFTC data showed that hedge funds trimmed their long positions in gold in the week to June 9 (from 169k to 162.4k contracts), though short positions increased marginally (down 35k contracts), which meant the balance remained practically the same. Today, there is not much in the way of major data besides the latest New York Empire State manufacturing index. Dallas Fed President Robert Kaplan will speak at 17:30 Moscow time, followed by San Francisco Fed President Mary Daly at 19:30. We think gold's performance today will depend on how the US session goes. The closest technical support level for gold is $1,712/ SE METALS UNDER PRESSURE DESPITE ENCOURAGING CHINESE MACRO DATABase metal quotes surged last week until Thursday, when fears of a possible second wave of the virus took hold and put a halt to the rally. This morning, meanwhile, China released a couple of pieces of encouraging data. Industrial output climbed 4.4% y-o-y in May (up from 3.9% growth in April), with output of aluminum edging down 0.1% y-o-y (was up 0.4% versus April) but output of steel climbing 4.2% y-o-y. Investment in infrastructure - a driver of demand for base metals - posted an impressive 11.6% y-o-y gain. However, these overall promising macro prints have been unable to stem the drop in demand due to increasing fears of a second wave of the virus. China has closed a major wholesale food market (where 36 infections were registered) and has locked down 11 nearby residential compounds. Meanwhile, a number of US states are also seeing an increase in new cases. As a result, the 3m contracts for copper is down 1.6% (to $5,700/tonne), for nickel is down 1.0% (to 12,500/tonne) and for aluminum down 1.0% (to $1,570/oz)