Commodities Daily - June 6, 2019

> Oil pares losses after bearish EIA report amid rise in stock markets. This morning, the Russian energy minister said that Russia was still studying the situation to determine the proper course of action with regard to the OPEC+ deal, adding that July 2-4 was being discussed as a time frame for the OPEC+ meeting. Although these comments have generated uncertainty, we think that the currently positive stock market dynamics will be the main driver for oil today. At 15:30 Moscow time, all eyes will be on the ECB monetary policy statement and press conference. In our view, the regulator is likely to be dovish and perhaps outline the parameters of its TLTRO stimulus program. This would be positive for risk sentiment and thus stock markets and oil. A subsequent slide in EUR/USD would provide some headwinds for Brent, although we think this would not be enough to prevent it from advancing toward $62/bbl later in the day.> Gold prices rally stalls as dollar strengthens; ECB meeting and price correction eyed. Given the falling eurozone rates and elevated political risks of disciplinary action against Italy over public debt, we think that investors have recently been a bit too optimistic about the euro (since late May it has rallied by more than 1% on significantly lower US rates). Meanwhile, a dovish turn by the ECB could push EUR/USD sharply lower. Gold remains solidly in overbought territory, according to the Relative Strength Index, so we think that a correction toward $1,320/oz is in the cards today.