Commodities Daily - June 30, 2021

> Oil firms ahead of US inventory data and amid delay to OPEC+ JMMC meeting. Today, the market awaits weekly EIA inventory data, the EIA's monthly 914 US oil production report containing data for April, the eurozone CPI for June and the monthly ADP employment report. We expect the imminently expiring Brent August contract (the September contract is trading with a $0.5/bbl discount) to rebound to $75.5/bbl amid upbeat US inventory data (we expect another large crude inventory draw along with relatively small product storage changes) and US labor market data acting as a prelude to Friday's nonfarm payrolls report.> Gold slides on stronger dollar. Gold fell from $1,780/oz to $1,760/oz yesterday, while EUR/USD moved below 1.19. The US Conference Board consumer confidence index printed 127.3 points, above the 119 expected. Bullion is near $1,760/oz as we write. Today, the market awaits ADP employment data for June, US pending home sales for May and eurozone CPI statistics for June. We think that bullion will likely test support at $1,745/oz. OIL FIRMS AHEAD OF US INVENTORY DATA AND AMID DELAY TO OPEC+ JMMC MEETINGBrent began to stage a comeback yesterday after tumbling from $76.6/bbl on Monday to $73.9/bbl at yesterday's open. During European trading hours it reached as high as $75.5/bbl, drawing support from eurozone business and household confidence data that indicated another sharp increase in June to a 21-year high. Although the increase was mainly attributable to the services sector, confidence improved across all business sectors and among consumers. Sentiment improved in five of the six largest eurozone economies (only Spain saw a slight decline), supporting the narrative of a rebound in European oil demand. Furthermore, US consumer confidence soared in June to a fresh pandemic high, as Americans became more upbeat about the economy and jobs market. As more vaccinations are allowing the US to reopen in earnest, including large states such as California and New York, optimism is growing about economic and labor market conditions.Yesterday's main headline was a delay to the preliminary talks between OPEC+ ministers (the JMMC meeting was scheduled to take place today) by one day to allow more time to reach a compromise before the critical meeting, which will now take place tomorrow. The group is considering whether to continue reviving more crude supplies as global demand is bouncing back. Moscow is weighing a proposal to hike output, but Riyadh has signaled that it prefers a gradual approach. It is not unusual for OPEC+ to postpone a meeting. For example, it did so as recently as December, when a similar split between Riyadh and Moscow caused the group to delay talks by two days. It ultimately found a compromise, agreeing on a modest production increase. Riyadh is reportedly seeking a small hike of 0.5 mln bpd or less, while Russia is apparently seeking a hike of more than 1.0 mln bpd. We believe that the Saudi proposal is more likely to be adopted at this point, though a 1 mln bpd hike will become more likely at future meetings should Brent trade near $80/bbl.Brent remains just above $75/bbl as we write after the API reported a massive drop in US crude stocks by 8.15 mln bbl last week, a 2.4 mln bbl gasoline build and a 0.4 increase in distillates inventories. Today, the market awaits weekly EIA inventory data, the EIA's monthly 914 US oil production report containing data for April, the eurozone CPI for June and the monthly ADP employment report. We expect the imminently expiring Brent August contract (the September contract is trading with a $0.5/bbl discount) to rebound to $75.5/bbl amid upbeat US inventory data (we expect another large crude inventory draw along with relatively small product storage changes) and US labor market data acting as a prelude to Friday's nonfarm payrolls LD SLIDES ON STRONGER DOLLAR Gold fell from $1,780/oz to $1,760/oz yesterday, while EUR/USD decreased below $1.19. The US 10y Treasury yield held near 1.49%. The Conference Board consumer confidence index for June surged to 127.3 points, above the 119 consensus. That indicated a positive outlook for the US economy and labor market and created headwinds for bullion. Meanwhile, eurozone economic confidence for June also showed an increase, to 117.9, above the consensus of 116.5, while consumer confidence was -3.3, in line with expectations. This failed to support gold prices. Fed officials' comments yesterday also created pressure for bullion ahead of the upcoming labor market data. Richmond Fed President Thomas Barkin signaled that he would like to see more progress in the labor market before tapering. More hawkish comments came from Christopher Waller, who indicated that the US economy had showed a significant recovery and therefore it is possible to reduce the QE program sooner than expected. Additionally, Moderna said that its vaccine is effective and produces antibodies against the new Delta strain of the coronavirus. That tempers concern about the US economy recovery stalling but creates headwinds for gold.Bullion is hovering near $1,760/oz as we write. The market today awaits the ADP employment report for June, which should provide a read-through to Friday's nonfarm payrolls data. The consensus is for a 600k increase, but if the numbers end up being in line with or above expectations, gold may be pushed lower. Also, we would highlight US pending home sales for May and eurozone CPI data for June. We think that bullion will likely test support at $1,745/oz today on the back of data showing a further US labor market