Commodities Daily - March 19, 2020

> Oil keeps trending lower despite stimulus measures and upbeat EIA inventory report. This morning, Brent jumped to as high as $27.2/bbl following the ECB's announcement that it is launching a EUR750 bln bond buying program. We do not think any oil price gains are sustainable in the current conditions and expect Brent today to retest the $25.2/bbl technical support level, with a break below likely to cause it to fall to $22.7/bbl.> Gold still under pressure, along with other asset and commodity prices. Gold tested the $1,465/oz mark during this morning's trading in Asia and stands at $1,480/oz as we write. The unprecedented central bank measures have yet to halt the panic in markets and have merely served to strengthen the dollar. Today, Switzerland and South Africa will announce interest rate decisions, while US jobless claims, leading economic indicators and the Philadelphia Fed business outlook survey are due.OIL KEEPS TRENDING LOWER DESPITE STIMULUS MEASURES AND UPBEAT EIA INVENTORY REPORTAfter hovering below the $29/bbl mark during the Asian trading session yesterday, front-month Brent first slid to $28/bbl following the European open. Ahead of the EIA US inventory report, it was already trading at as low as $26.5/bbl amid stock market headwinds and dollar strengthening due to safe-haven demand. A rather upbeat EIA report then failed to provide any support to tumbling prices, and Brent eventually settled at $24.88/bbl, fixing $3.85/bbl below the previous settlement. Overnight, it hit its lowest point so far today at $24.52/bbl. The EIA report showed a rather mild 1.95 mln bbl increase in US crude stocks (in line with our expectation) to 453.7 mln bbl last week, compared with the Bloomberg consensus of a 3.7 mln bbl build and contrasting with the API's reported 0.42 mln bbl draw. The build came amid a 0.13 mln bpd weekly increase in imports to 6.54 mln bpd and a 0.1 mln bpd increase in crude oil production to 13.1 mln bpd, and happened despite a strong 0.97 mln bpd increase in exports to 4.38 mln bpd and a 0.12 mln bpd increase in refinery inputs to 15.82 mln bpd. The global spread of the coronavirus and the boost in the supply of cheap, discounted crude amid lower refinery demand globally will soon put the brakes on US crude exports, causing major stock builds. The refined product data was bullish again, with total petroleum stocks (including oil but excluding US strategic petroleum reserves) down 7.68 mln bbl. Gasoline stocks fell 6.2 mln bbl to 240.8 mln bbl, while distillate stocks were down 2.9 mln bbl to 125.1 mln bbl. Given that domestic refined product demand will be dented by the coronavirus lockdowns, US refiners will not boost oil intake after maintenance in April. This would certainly amplify the stock build rate in 2Q20.More and more oil market analytical agencies are acknowledging the possibility of $10/bbl Brent in April due to sharply lower demand and surging OPEC production. According to the latest analysis from Energy Aspects, global oil demand could decline as much as 10 mln bpd y-o-y in April. In addition, under the worst case - coronavirus containment measures running all the way through 4Q20 - the y-o-y oil demand decline could be close to 4 mln bpd. This implies that to guarantee oil market stability, OPEC+ cuts should be as high as 5 mln bpd and should also account for the actual y-o-y production growth from non-OPEC countries this year. The latest rhetoric from Russian and Saudi officials, however, does not suggest that there are plans to resume cooperation. In our view, for Russia to begin considering resuming OPEC+ participation, it would take a combination of shockingly low oil prices and strong ruble depreciation. Meanwhile, Saudi Arabia has been signaling readiness to drag out the price war as long as needed. The longer it takes, the harder it will be to clear the resulting inventory overhang. This morning, Brent jumped to as high as $27.2/bbl following the ECB's announcement that it is launching a EUR750 bln bond buying program. We do not think any oil price gains are sustainable in the current conditions and expect Brent today to retest the $25.2/bbl technical support level, with a break below likely to cause it to fall to $22.7/ LD STILL UNDER PRESSURE, ALONG WITH OTHER ASSET AND COMMODITY PRICESPanic continues to grip the precious metals markets amid dollar strength. Yesterday witnessed a broad selloff, with silver losing 5%, platinum down 5.7%, palladium off by 3% and gold by 2.8%. Despite the central bank measures across the global to tackle the demand shock caused by the coronavirus, investors continue to close out positions in financial instruments as well as commodities, generating increased demand for the dollar. The greenback strengthened 1.6% yesterday as a result.Following recent moves by the Fed and BoJ, the ECB yesterday announced a EUR750 bln bond buyback program through to the end of the year at least. The ECB will purchase both government and corporate bonds. The market is now closely monitoring the economic incentives in the pipeline in the US. Yesterday, the Senate approved a second package of emergency measures to combat the spread of the coronavirus, and it is now considering a fiscal package totaling $1.3 trln.Against this backdrop, ETFs are behaving in an interesting manner, as they continue to reduce gold, platinum and palladium positions, but yesterday saw a 1.9% jump in silver purchases (by 11.245 moz).Today, Switzerland and South Africa will announce interest rate decisions, while US jobless claims, leading economic indicators and the Philadelphia Fed business outlook survey are