Commodities Daily - May 20, 2020

> Oil prices stabilize, Brent at crossroad ahead of EIA inventory data. Brent is hovering just below $35/bbl as we write. The recent lack of upward momentum suggests that, if it first breaks below support at $34.3/bbl, it could then retrace to technical support at $33.2/bbl. A weekly increase in US crude oil inventories in line with the consensus would back this move. On the other hand, if the EIA today makes a strong downward revision to its estimate of total crude oil stocks (toward the API figure), a push higher toward the lower end of the $36.0-36.4/bbl technical corridor could be in the cards. > Gold firms again and is trading around $1,750/oz. Yesterday, Fed Chair Jerome Powell reiterated that the Fed stands ready to use all means necessary to support the stability of the financial system. At 21:00 Moscow time today, the minutes to the latest FOMC meeting will be released and two Fed officials are due to give speeches. We expect gold to test technical resistance at $1,765 /oz today.OIL PRICES STABILIZE, BRENT AT CROSSROAD AHEAD OF EIA INVENTORY DATAAfter advancing steadily since last Thursday, gaining almost $7/bbl and heading toward $36/bbl, the rally in Brent stalled and yesterday the front-month contract stabilized around $35/bbl and eventually settled at $34.65/bbl, fixing $0.16/bbl below the previous settlement. Global stock markets (with which Brent has recently been showing a strong positive correlation) are also adrift. This is partially due to the "vaccine rally" having faltered yesterday after a report from medical news website STAT cast doubt over the positive preliminary results from a Moderna vaccine trial. European stock markets, meanwhile, are showing little enthusiasm even after a coordinated stimulus plan worth nearly $550 bln was agreed to. Overnight, the API reported that US crude stocks fell 4.8 mln bbl to 521.3 mln bbl last week (the EIA's latest report put them at 531.47 mln bbl). The significant disparity between the API's and EIA's overall oil stocks data remains a source of concern, suggesting that the EIA could report a vast crude oil inventory draw today. Note that the EIA data released last week estimated the first weekly crude oil stock draw since mid-January. The API's reported oil stock draw came amid a 0.94 mln bpd decrease in imports and a 0.23 mln bpd increase in refinery runs. Crude stocks at the Cushing, Oklahoma delivery hub fell by a strong 5 mln bbl. The refined product data was mixed, showing a 0.65 mln bbl draw in gasoline stocks and a strong 5.1 mln bbl increase in distillate inventories. Investors are now positioning themselves for the EIA report today at 17:30 Moscow time. The Bloomberg consensus is calling for a 2.15 mln bbl crude stock build, a 2.9 mln bbl decrease in gasoline inventories and a 1.5 mln bbl gain in distillate stocks.Brent is hovering just below $35/bbl as we write. The recent lack of upward momentum suggests that, if it first breaks below support at $34.3/bbl, it could then retrace to technical support at $33.2/bbl. A weekly increase in US crude oil inventories in line with the consensus would back this move. On the other hand, if the EIA today makes a strong downward revision to its estimate of total crude oil stocks (toward the API figure), a push higher toward the lower end of the $36.0-36.4/bbl technical corridor could be in the LD FIRMS AGAIN AND IS TRADING AROUND $1,750/OZGold was enjoying a potent rally on Monday before reports emerged that US pharmaceutical company Moderna had encountered positive results in early clinical trials of a coronavirus vaccine, which brought the momentum to a halt and pulled quotes back to the $1,730/oz mark. Yesterday, however, investors exhibited skepticism over the imminent success of the vaccine, which boosted gold. US medical news website STAT reported that experts were saying that it was difficult to judge the success of the test. Meanwhile, the US National Institute for Allergy and Infectious Diseases, which is working with Moderna, failed to comment on Moderna's statement, which caused the company's stock to drop almost 10%. Gold, by contrast, gained fresh impetus and was trading at around $1,750/oz this morning.We expect gold to test technical resistance at $1,765 /oz today. Yesterday, Fed Chair Jerome Powell reiterated that the Fed stands ready to use all means necessary to support the stability of the financial system. Powell said lending programs for small and medium-sized businesses and local governments would begin operating by the end of this month. At 21:00 Moscow time today, the minutes to the latest FOMC meeting will be released and two Fed officials are due to give speeches. We expect gold to test technical resistance at $1,765 /oz. We think safe-haven assets will remain in demand ahead of the tomorrow's publication of preliminary PMIs for May for several developed