Commodities Daily - June 26, 2020

> Oil ticks higher amid OPEC+ determination to curb supply as stock markets rise, but surge in coronavirus cases clouds demand. Brent broke above $41.3/bbl resistance overnight and remained above that mark this morning, suggesting that it is now free to target the next technical resistance at $42.3/bbl. However, there are plenty of obstacles in the way, including US-China relations and the second wave of the coronavirus.> Gold trades sideways on mixed US data and remains at technical crossroad. We stick to our view that if gold breaks above technical resistance at $1,768/oz today (which it failed to do yesterday), it will very likely consolidate in the $1,778-1,789/oz technical range. However, if today's US personal incomes and spending data and the Michigan consumer sentiment survey turn out to be upbeat, gold could face headwinds, potentially pressuring it down to the $1,741-1,750/oz technical range.OIL TICKS HIGHER AMID OPEC+ DETERMINATION TO CURB SUPPLY AS STOCK MARKETS RISE, BUT SURGE IN CORONAVIRUS CASES CLOUDS DEMANDFront-month Brent was trading within a $39.5-40.5/bbl range yesterday morning and began to generate positive momentum after the opening in New York, climbing toward $41.5/bbl amid stock market tailwinds. It eventually settled at $41.05/bbl, $0.74/bbl higher on the day. The S&P 500 gained 1.1% on loosening restrictions on the US banking sector (which we discuss in more detail in the gold section below), as the markets brushed off another increase in US daily Covid-19 infections despite it reaching another record high of almost 40,000 and Texas taking a pause with its relaxation. The surge in US coronavirus cases clouds the demand outlook and could exert substantial pressure on oil prices if deteriorates further, especially as the surge is being seen in some of the most important locations in terms of oil demand. Infections are on the rise in nine of the country's top 20 gasoline-consuming states, with the top three - California, Texas, and Florida - accounting for 43% of new cases on June 24, according to Bloomberg. Localized restrictions to slow the virus have been re-imposed in parts of Lisbon in Portugal, western Germany, Australia's Victoria state and Beijing. As infections continue to surge in many parts of the world, a V-shaped oil demand recovery (as forecasted by all three major oil market forecasting bodies) could now be in doubt, with many refiners still struggling with low margins.One upbeat fundamental factor seen yesterday was a smaller than expected Urals loading plan for July from Russia's three main western ports: Primorsk and Ust-Luga in the Baltic Sea and Novorossiysk in the Black Sea. This reassured investors that Russia is resolute in rebalancing the oil market this year and firmly sticking to its substantial production cuts under the OPEC+ deal. The preliminary export program (for the first 10 days of July) from the aforementioned destinations had indicated a shipping rate of 0.88 mln bpd, but the full plan now suggests the figure has dropped to 0.785 mln bpd, according to Bloomberg. Before the current OPEC+ deal, Urals exports from these ports stood at around 2 mln bpd, so the current subdued supply is the main factor supporting the price of Urals against Brent. Another supply-side factor worth mentioning is a Federal Reserve Bank of Dallas poll showing that more than half of 56 executives who participated told the bank that they'll restart most of their idled output by the end of July. This could lead to an upward revision to US oil production forecasts later in 2H20 and weigh on prices. We believe than an earlier than expected rebound in US oil production would not undermine OPEC+'s market rebalancing efforts in 2H20. Brent broke above $41.3/bbl resistance overnight and remained above that mark this morning, suggesting that it is now free to target the next technical resistance at $42.3/bbl. However, there are plenty of obstacles in the way, including US-China relations and the second wave of the LD TRADES SIDEWAYS ON MIXED US DATA AND REMAINS AT TECHNICAL CROSSROADGold failed to break above technical resistance at $1,768/oz early yesterday and then slid to an intraday low of $1,755/oz. The initial advance was backed by US weekly jobless claims falling to 1.48 mln, above the consensus forecast of 1.3 mln, as a second wave of layoffs appears to be offsetting hiring by businesses that have begun to reopen, suggesting that the US labor market could take years to recover from the effects of Covid-19. US durable goods orders rebounded by more than expected in May, paring back a fraction of the declines in prior months. Orders for non-defense capital goods excluding aircraft (a proxy for business spending plans) increased 2.3% in May after dropping 6.5% in April, though they remain 5.6% below pre-pandemic levels.One factor providing a headwind for gold during yesterday's US trading hours was the results of the Fed's annual stress tests, which indicated that key US banks are capable of comfortably addressing the aftermath of Covid-19 while also implementing measures to ensure that scenario, including capping dividends. After that news, gold became largely stuck in a rather narrow range of $1,760-1,765/oz, where it remained this morning. US-China relations are back in the headlines after the US Senate passed a bill that would place sanctions on Chinese officials and entities, including private, that are accused of eroding Hong Kong's autonomy. We stick to our view that if gold breaks above technical resistance at $1,768/oz today (which it failed to do yesterday), it will very likely consolidate in the $1,778-1,789/oz technical range. However, if today's US personal incomes and spending data and the Michigan consumer sentiment survey turn out to be upbeat, gold could face headwinds, potentially pressuring it down to the $1,741-1,750/oz technical