Commodities Daily - June 17, 2021

> Oil slides following Fed meeting, after rising on upbeat EIA data. This morning, Brent has continued yesterday's negative momentum and slid toward $73.5/bbl. The highlights on the macro calendar are May CPI from the eurozone and weekly jobless claims and the Philadelphia Fed business outlook survey from the US. We expect Brent to consolidate around $73.5/bbl today or perhaps begin to pare back yesterday's losses, as the oil market has continued to display signs of fundamental strength.> Gold retreats in wake of hawkish outcome to Fed meeting. Gold plunged from $1,860/oz to $1,810/oz yesterday as the Fed signaled an earlier than anticipated rate hike before the end of 2023. Meanwhile, the 10y Treasury yield climbed to 1.57%. Bullion has edged up slightly this morning and is trading near $1,815/oz. Today, the market awaits US initial jobless claims and leading indicators for May and eurozone CPI for May. We expect gold to stick in the $1,810-1,840/oz range today.OIL SLIDES FOLLOWING FED MEETING, AFTER RISING ON UPBEAT EIA DATAIn the first half of the day yesterday, front-month Brent slid $0.5/bbl to $74.0/bbl, but it then began to rise back to $74.5/bbl ahead of the much-anticipated weekly EIA inventory report. Following the API's reported 8.54 mln bbl crude stock draw on Tuesday, the EIA yesterday registered a 7.35 mln bbl draw to 466.7 mln bbl. This came amid a 0.95 mln bpd increase in exports to 3.88 mln bpd and a 0.41 mln bpd increase in refinery inputs to 16.34 mln bpd. A 0.1 mln bpd increase in imports to 6.75 mln bpd and a 0.20 mln bpd increase in crude oil production to 11.2 mln bpd proved insufficient to offset the overall draw. The refined product data was mixed, with gasoline stocks up 1.95 mln bbl at 243.0 mln bbl and distillate stocks down 1.0 mln bbl at 136.2 mln bbl. Total commercial petroleum stockpiles (oil and refined products combined, excluding strategic petroleum reserves) fell 4.65 mln bbl, though this was partially offset by a strong build in propane stocks.After the release, Brent surged to a YTD high of $74.96/bbl, also supported by a 0.9 mln bpd jump in US gasoline demand to 9.36 mln bpd. American drivers are getting back on the road, and their numbers are expected to keep growing with the reopening of California and New York. The build in gasoline inventories last week was attributable to increased refining activity and also a steady flow of imports to the New York Harbor and the rest of the US east coast. Diesel inventories declined for the first time in two weeks, with most of the draw stemming from the Gulf Coast, which besides supplying half the country with diesel also ships it to Mexico and Brazil (and a little bit goes to Europe as well). US jet fuel demand has reached the highest since May 28, and there is no surprise there, as traffic at airports is increasing and jet fuel markets across the US have been strong this week. Later in the day, however, oil prices fell alongside global stock markets on what seemed to be a somewhat less dovish tone from the Federal Reserve. The dollar got a boost from this, which was enough to offset the impact from the signs of a strengthening crude market. Chairman Jerome Powell said the Fed would begin to discuss tapering its massive asset purchases, while several FOMC voters penciled in two rate hikes by the end of 2023. This morning, Brent has continued yesterday's negative momentum and slid toward $73.5/bbl. The highlights on the macro calendar are May CPI from the eurozone and weekly jobless claims and the Philadelphia Fed business outlook survey from the US. We expect Brent to consolidate around $73.5/bbl today or perhaps begin to pare back yesterday's losses, as the oil market has continued to display signs of fundamental LD RETREATS IN WAKE OF HAWKISH OUTCOME TO FED MEETINGGold sank from $1,860/oz to $1,810/oz yesterday while the 10y Treasury yield rallied to 1.57%. EUR/USD eased to 1.20, creating an additional headwind for bullion. Gold was trading near $1,860/oz for most of the day, supported by disappointing US macro data. Housing starts came in at 1,572k (versus the 1,630k consensus) and building permits reached 1,681k (versus the 1,730k consensus). However, bullion failed to hold on at this level in light of pressure created by the Fed policy meeting. The most interesting takeaway was that 13 of the 18 FOMC members expect at least one rate hike before the end of 2023, up from seven at the previous meeting in March. Also, 11 expect at least two rate hikes before the end of 2023. US Fed Chairman Jerome Powell said the FOMC has begun to discuss tapering QE. This provided a hawkish surprise for the market, and gold sank to $1,810/oz. Moreover, the Fed raised its economic growth projection to 7% in 2021 it sees inflation ending the year at 3.4%. Gold has recovered slightly to $1,815/oz as we write. Today, the market awaits US leading indicators for May and initial jobless claims, while the final eurozone CPI reading for May is due. We think investors will attempt to reverse yesterday's shock, as the leading index is expected to decline to 1.3%. Additional support could come if the initial jobless claims data comes in higher than the expected 360k for last week. We expect gold to remain in a $1,810-1,840/oz corridor