Commodities Daily - March 24, 2022

> Oil continues to rise as CPC oil export terminal in Black Sea halts loadings and amid upbeat EIA report. In our view, Brent is likely to start stabilizing near $120/bbl today. Investors will be watching the EU-NATO summit in Brussels, where countries will discuss their ability to reduce their reliance on the Russian energy sector.> Gold advances as US Treasury yields slide. Gold rose from $1,920/oz to $1,945/oz yesterday, while the 10y US Treasury yield declined from 2.39% to 2.29%. Gold is trading near $1,940/oz as we write. Today, the market will be eyeing the preliminary March Markit PMIs for the US and eurozone and US durable goods orders for February. We expect bullion to trade in a $1,935-1,950/oz range today.> Base metals and thermal coal on the rise amid surge in natural gas quotes. Soaring natural gas quotes pushed base metals higher yesterday. While aluminum and zinc reacted the most - these metals are the most energy-intensive - nickel seems to have reversed its trajectory after rebounding from technical levels. Thermal coal is also on the rise amid a surge in natural gas prices, with risks to the upside prevailing.OIL CONTINUES TO RISE AS CPC OIL EXPORT TERMINAL IN BLACK SEA HALTS LOADINGS AND AMID UPBEAT EIA REPORTYesterday, after starting the day near $115/bbl, Brent began to generate positive momentum. It rose slightly above $122/bbl later in the day as storm damage to a vital CPC export terminal along the Black Sea exacerbated the supply risks. Exports from the terminal could be curtailed by up to 1 mln bpd for as long as 1.5-2 months (though the repairs could take just around three weeks, strict safety measures and environmental protocols could delay the restart). Some CPC oil could be re-routed via pipelines or rail to China and Baltic ports, or via the BTC (Baku-Ceyhan) pipeline. A prolonged reduction in Kazakh CPC exports would leave the European market alarmingly tight and increase the risk of cuts to refinery runs. Exports from the CPC terminal have averaged 1.3 mln bpd in recent years, of which 0.9 mln bpd typically ends up in Europe.Also price-supportive yesterday was the weekly EIA inventory update, which showed draws in US stockpiles of crude oil (-2.5 mln bbl), gasoline (-2.95 mln bbl) and distillates (-2 mln bbl). Crude oil exports jumped to 3.8 mln bpd, as Europe has continued to increasingly rely on US oil amid the losses in both Russian and now CPC crude. The market will likely only get tighter moving into the summer, with refinery runs ramping up in the US (to a peak of 16.6 mln bpd in June from the current 15.9 mln bpd) and Europe's demand for US barrels remaining high. On the back of this, we expect more SPR releases to be announced in the coming months to support US summer runs and help meet European demand.This morning, Brent rallied toward $124/bbl before easing toward $120/bbl amid headwinds from China. The country's worst coronavirus outbreak since the start of the pandemic has curtailed oil demand, with strict lockdowns curbing consumption and also forcing some refiners to cut back on their throughput with inventories in some regions beginning to swell. There was also a mass cancellation of flights on Tuesday following the crash of a plane operated by China Eastern Airlines, but it remains unclear at this stage how long the disruption will last. In our view, Brent is likely to start stabilizing near $120/bbl today. Investors will be watching the EU-NATO summit in Brussels, where countries will discuss their ability to reduce their reliance on the Russian energy LD ADVANCES AS US TREASURY YIELDS SLIDEGold moved up from $1,920/oz to $1,945/oz yesterday, while the 10y US Treasury yield slid from 2.39% to 2.29%. EUR/USD eased from 1.102 to 1.100. The decline in US Treasury yields allowed non-yielding gold to make gains. US new home sales for February came in below consensus, providing an additional tailwind for gold. Fed Chair Jerome Powell's speech was a non-event, as he did not touch on monetary policy and spoke only about cryptocurrency regulation. However, regional Fed presidents came out with quite hawkish comments, rendering worries about a 50 bp rate hike more real. San Francisco Fed President Mary Daly said the Fed could hike by 50 bps and decide to shrink the balance sheet at the next meeting. Cleveland Fed President Loretta Mester said she favored a 50 bp hike but did not specify at which meeting, noting only that it was probably needed this year.Gold is trading near $1,940/oz as we write. Today the market awaits the preliminary March Markit PMIs for the US and eurozone, US durable goods orders for February, the Kansas City Fed manufacturing activity index for March, US weekly initial jobless claims and speeches by regional Fed officials. The consensus is calling for mixed macroeconomic data. The Markit PMIs and Kansas Fed data are expected to deteriorate m-o-m, which could create tailwinds for bullion. Geopolitics and the NATO/G7 summit in Brussels will draw attention today, where discussion of new restrictions on Russia could stoke further inflationary fears among investors and support gold. We expect bullion to trade in $1,935-1,950/oz corridor today, and we think it could test resistance at $1,950/oz if new sanctions are SE METALS AND THERMAL COAL ON THE RISE AMID SURGE IN NATURAL GAS QUOTESBase metals closed in the black yesterday. The 3m LME contract for copper was up 1.66% (+$171/tonne from the previous day's close) to settle at $10,439/tonne, aluminum rose 4.24% (+$148/tonne) to $3,653/tonne, nickel surged 14.97% (+$4,216/tonne) to $32,375/tonne and zinc soared 5.45% (+$212/tonne) to $4,100/tonne.Volatility in the nickel market increased yesterday. Futures in both London and Shanghai surged to the maximum daily limit yesterday. The price found support at circa $27,000/tonne, and now we are seeing increased interest from buyers. Meanwhile, aluminum and zinc also outperformed yesterday amid surging natural gas quotes in Europe. A 20% surge in natural gas prices to $1,370 per mcm came on fears over supply. The most energy-intensive metals - aluminum and zinc - reacted accordingly. We believe the situation in the gas market will continue to remain in focus.Thermal coal is also benefiting from rising natural gas quotes, with Newcastle FOB Australia and API2 surging 22% and 24% from the beginning of this week to $270/tonne and $297/tonne, respectively. We believe there is more upside potential for both contracts in the short- to mid-term owing to fundamental factors. Tightening seaborne supply due to rebalancing (EU's replacement of Russian coal with coal from other countries) and uncertainties over the natural gas market represent risks to the