Commodities Daily - June 5, 2019

> Oil drawing support from Fed rate cut prospects, but OPEC+ deal uncertainty and bearish API data are weighing. We expect the EIA's inventory data today to be slightly less bearish than yesterday's API figures, but bearish nonetheless, given the delayed seasonal pickup in refinery demand. Refineries are still running below their five-year average output level (in fact, at the lowest rate since 2016) amid disruptions caused by severe floods. Moreover, the anticipated jump in exports isn't likely to show up in the data yet for either crude or products. We therefore expect Brent to move lower following the EIA release, into the $60-61/bbl range. We do not think it will settle below the $59.74/bbl technical support level (the 38.2% Fibonacci retracement level from Brent's December rise).> Gold prices notch higher amid prospects of Fed rate cut; technical correction likely. Today, investors will eye the ADP employment figure for May, which is a proxy for nonfarm payrolls (due on Friday). Given the dovish comments from the Fed, only a very bad release could trigger a significant market reaction. During Asian trading this morning gold rallied to $1,335/oz following yesterday's upbeat developments. But this has now put gold in strongly overbought territory, according to the Relative Strength Index. We think this will induce a technical correction later today to $1,330/oz or even slightly lower, although any correction would encounter headwinds from the weaker dollar.