Commodities Daily - May 12, 2021

> Oil ticks higher yesterday on upbeat OPEC and EIA monthly reports; IEA monthly report and EIA weekly inventory update due today. Today, investors will eye the monthly IEA report, weekly EIA inventory update and US April CPI data. In our view, Brent is likely to continue trading above support at $67.2/bbl and below $69.2/bbl. A break above $69.2/bbl, which could prompt a surge to $71.4/bbl, as well as a break below $67.2/bbl, which could lead to a drop to $65.7/bbl, both seem unlikely to us.> Gold trades flat as Treasury yields edge up. Gold closed at $1,835/oz yesterday, having bounced back after testing the $1,820/oz support level during the day. The 10y US Treasury yield climbed to 1.62%, its highest point in more than a week. Gold is trading at $1,830/oz as we write this morning. Today's calendar for the gold market includes the US CPI reading for April. Overall, we expect gold to again test support at $1,820/oz today, with a break above resistance at $1,845/oz unlikely, in our view.OIL TICKS HIGHER YESTERDAY ON UPBEAT OPEC AND EIA MONTHLY REPORTS; IEA MONTHLY REPORT AND EIA WEEKLY INVENTORY UPDATE DUE TODAYYesterday, front-month Brent slid $1.1/bbl to $67.2/bbl during the first half of the day, but it then began to pare back its losses, surging toward $68.8/bbl. It eventually settled at $68.55/bbl, fixing $0.23/bbl above the previous settlement. The highlights of the day were the monthly oil market reports first from OPEC and then from the EIA. Both turned out to be rather upbeat, with both agencies making downward revisions to their previous 2021 non-OPEC supply estimates (OPEC lowered it by 0.23 mln bpd and the EIA by 0.35 mln bpd) and both revisions led by North America. Also upbeat was the fact that both OPEC and the EIA left their 2021 demand estimates almost unchanged, which was somewhat unexpected given the devastating coronavirus outbreak in India, which has prompted calls to lock down the world's second most populous country and third largest oil importer and consumer. India's top state oil refiners have already started cutting back on runs and their imports of crude amid the decline in fuel consumption.Overnight, the API reported that US crude stocks fell by 2.5 mln bbl last week. The refined product data was more mixed, showing a strong 5.6 mln bbl build in gasoline stocks and a slight 0.9 mln bbl draw in distillate inventories. The EIA weekly inventory report is due today at 17:30 Moscow time. The Bloomberg consensus is for a 2.1 mln bbl crude draw, no change to gasoline stocks and a 1.5 mln bbl drop in distillate stocks. We anticipate another large crude inventory draw, a further significant draw on distillate stocks and another build in gasoline stocks. The market reaction to the release is likely to be muted, as the data will not reflect the disruption to the Colonial Pipeline network. Next week's EIA update is more likely to spur price volatility, as it will show what impact the disruption has had on stockpiles. Based on what we already know, it is clear that the idling of the Colonial Pipeline System, a vital conduit that connects US Gulf Coast refineries with consumers along the East Coast, has caused huge problems. Gasoline supplies are running out in some regions, while Gulf Coast refiners have been forced to reduce their run rates, which has cut into crude oil demand. Ships have also been booked to deal with the rapidly growing stockpiles of fuel products. The Colonial Pipeline Company should know by later today whether it is safe to restart its network, which has been halted since the cyberattack late last week.Today, before the EIA update and before you receive this note, investors in the oil market will have pored over the IEA monthly oil market report and US April CPI data. It will be interesting to see whether the IEA follows the lead of OPEC and the EIA and keeps its 2021 global oil demand estimate unchanged from last month. In our view, Brent is likely to continue trading above support at $67.2/bbl and below $69.2/bbl today. A break above $69.2/bbl, which could prompt a surge to $71.4/bbl, as well as a break below $67.2/bbl, which could lead to a drop to $65.7/bbl, both seem unlikely to LD TRADES FLAT AS TREASURY YIELDS EDGE UPGold closed at $1,835/oz yesterday, having bounced back after testing the $1,820/oz support level during the day. The 10y US Treasury yield climbed to 1.62%, its highest point in more than a week, while EUR/USD held steady at 1.214. In the middle of the day, the ZEW eurozone economic sentiment index was reported at 84 points for May, boosting the outlook for the eurozone economic recovery and supporting gold prices. Later in the day, the US Labor Department reported job openings in March at a record 8.1 mln. This seemed to confirm that there are still some issues in the labor market. Meanwhile, Fed officials said the US economy was on the road to recovery, but indicated that it could be bumpy, especially in terms of the labor market. This supported gold yesterday, as investors gained confidence that the Fed will keep its current policy on hold.Gold is trading at $1,830/oz as we write this morning. Today's calendar for the gold market includes the US CPI reading for April and a 10y Treasury auction. The former could add fuel to concerns about further monetary tightening and pressure bullion, though a very high reading could create tailwinds. Overall, we expect gold to again test support at $1,820/oz today, with a break above resistance at $1,845/oz unlikely, in our