Commodities Daily - June 7, 2021

> Oil prices stabilize ahead of a busy week. This morning, Brent rallied toward $72.3/bbl before starting to slide back toward $71.5/bbl. There are no important data releases today, although this week is busy and investors will continue to eye Iranian nuclear talks on June 10 and will be digesting the monthly EIA, OPEC and IEA reports, as well as crucial US May CPI data that will be released on Thursday. We think that today Brent will continue to trade steadily around the $71.5/bbl mark amid a lack of strong drivers. Strong support is at $70.7/bbl.> Gold advances as US jobs disappoint. Gold rose to $1,890/oz on Friday while the 10y US Treasury yield eased to 1.55% after the nonfarm payrolls data indicated a 559k gain in May, below the 675k consensus. Bullion is trading near $1,885/oz as we write. This week's main event will be the US CPI reading for May on Thursday. We expect gold to stay in the $1,870-$1,890/oz range today.OIL PRICES STABILIZE AHEAD OF A BUSY WEEKAfter trading around $71/bbl at the start of the day on Friday, front-month Brent began to generate positive momentum, first rallying to $71.5/bbl. This is where it was trading ahead of the US monthly employment report. US nonfarm payrolls did not rise as much as expected in May, and as a result the dollar weakened. This supported Brent toward $72.2/bbl. The jobs report also helped confirm market expectations that the Fed will maintain its accommodative stance. This, in turn, pushed US equities up to within a whisker of their all-time highs. Also important to note is that a strong rise in hourly wages added to inflation worries. Later in the day, however, the rally in oil prices eased and Brent eventually settled at $71.89/bbl, $0.58/bbl above the previous settlement. It bears highlighting that the recent rally in oil prices has now resulted in the RSI technical indicator signaling that oil is nearing overbought territory.This morning, Brent rallied toward $72.3/bbl, but then started to slide back toward $71.5/bbl as government data showed that China's crude oil imports in May dipped 14.6% from a high base a year earlier (9.65 mln bpd in May versus 9.82 mln bpd in April and 11.3 mln bpd last May, when Chinese buyers snapped up cheap oil amid the spread of the coronavirus), with maintenance at refineries limiting consumption. However, the summer demand outlook in the US, Europe and China is still positive. Traders are increasingly suggesting that without an imminent revival of the Iran nuclear accord, prices would continue to grind higher as summer demand picks up.We still expect the 2015 Iran nuclear deal to be restored, potentially at some point between Iran's presidential election (June 18) and the end of President Rouhani's term in office (early August). However, further diplomatic compromises are still required. A deal being struck in this time frame would mean US sanctions on Iranian oil exports likely being lifted in 4Q21 (October or even early November), as we still anticipate an "implementation period" of at least two months after a deal is announced. In turn, this would limit growth in Iranian crude production in 3Q21 before what would be a larger ramp-up over 4Q21 and 1Q22.There are no important data releases today, although this week is busy and investors will continue to eye Iranian nuclear talks on June 10 in Vienna and will be digesting the monthly EIA, OPEC and IEA reports, as well as crucial US May CPI data that will be released on Thursday. We think that today Brent will continue to trade steadily around the $71.5/bbl mark amid a lack of strong drivers. Strong support is at $70.7/bbl. This week, however, we think that Brent could begin to target the $73/bbl mark as market outlooks to be released by the three major oil analytical agencies are expected to be upbeat, as is the weekly EIA inventory data. Inflation data for May from the world's two biggest economies poses the largest risk to oil prices this LD ADVANCES AS US JOBS DISAPPOINT Gold surged from $1,870/oz to $1,890/oz on Friday as the 10y US Treasury yield declined to 1.55%. EUR/USD firmed to 1.216, creating support for bullion. US nonfarm payrolls rose by 559k in May, below the consensus of 675k, which surprised the markets given the much more positive ADP employment report released the day before. Uncertainty over the labor market recovery, which could deter the Fed from discussing monetary policy tightening at its June meeting, pushed gold higher on Friday. However, Friday's employment situation report also indicated a 0.5% rise in average hourly earnings, which could attract workers in the coming months. In a further tailwind for bullion, US factory orders slipped 0.6% in April, below the expected 0.2% decline. Gold is trading near $1,885/oz as we write. This week, investors await US CPI data for May and an ECB monetary policy decision and press conference by ECB President Christine Lagarde on Thursday. Also on the US agenda are NFIB small business optimism for May, the University of Michigan sentiment index for June, the final reading of wholesale inventories for April along with the usual weekly jobless claims figures. A G7 leaders' summit will take place in Cornwall on Friday. No important macro data is scheduled for release today, so we expect bullion to remain range-bound at $1,870-1,890/