Commodities Daily - November 15, 2021

> Oil remains under pressure amid more calls to release crude from US SPR. This morning, Brent retested support at $81.3/bbl, as over the weekend US Senate Majority Leader Chuck Schumer urged President Joe Biden to release oil from the nation's emergency reserves, saying that consumers needed immediate relief from high gas prices. In our view, Brent is likely to remain above support at $81.3/bbl today amid tailwinds from the upbeat October retail sales and industrial production data from China this morning.> Gold holds steady amid mixed macro data. Gold traded around the $1,860/oz mark on Friday, while the US 10y Treasury yield remained unchanged at 1.56%. Gold is still trading near $1,860/oz as we write. Today, the market awaits the Empire State manufacturing index for November. We expect bullion to trade in a $1,830-1,860/oz range today.> Metals mostly higher, Chinese data in focus. Base metals traded mostly higher on Friday. Today, market sentiment is being driven by Chinese data, with all eyes on metals output data for October. Coal and iron ore prices are in retreat as daily coal output has finally reached the desired level, while steel mills continue to run at lower capacity due to curbs on emissions and electricity consumption.OIL REMAINS UNDER PRESSURE AMID MORE CALLS TO RELEASE CRUDE FROM US SPROn Friday, Brent fluctuated within a range of $81.3-82.9/bbl, eventually fixing at $82.17/bbl, $0.7/bbl below the previous settlement. White House Press Secretary Jen Psaki declined to say whether US President Joe Biden planned to release oil from the Strategic Petroleum Reserve, noting that the administration has been pushing oil-producing countries to pump more crude and that the White House is looking at a range of options. For several weeks now, Biden has been weighing moves - including a SPR release - to bring down prices of gas at the pump, which have hit seven-year highs. The related news flow has been drawing a lot of attention from investors in the oil market.This morning, Brent retested support at $81.3/bbl, as over the weekend US Senate Majority Leader Chuck Schumer urged Biden to release oil from the nation's emergency reserves, saying that consumers needed immediate relief from high gas prices. Today, Bloomberg noted (citing a Washington Post-ABC News poll) that about half of Americans overall, and half of independent voters, blame Biden for the pickup in inflation, and that the president's approval rating has fallen to a new low as a result. Growing pressure on Biden to release crude from the SPR is likely to weigh on prices this week, as investors will be pricing in an increasingly high likelihood that the White House will give in to the mounting pressure.In our view, Brent is likely to remain above support at $81.3/bbl today amid tailwinds from the upbeat October retail sales and industrial production data from China this morning. China's economy fared better than expected in October, as retail sales climbed and the energy shortages eased. However, the slump in the property market (real estate and related industries contribute 25% of Chinese GDP) and rising Covid cases suggest that the recovery is not yet on solid ground. This week, as the White House weighs its options, investors will get a slew of indicators to help them gauge the state of the oil market. They will also hear from top-level OPEC officials, including the Saudi energy minister, who are scheduled to speak at the ADIPEC conference in Abu Dhabi. Meanwhile, the IEA is set to release its latest monthly oil market report on Tuesday, which will contain key insight into market balances as demand continues to pick LD HOLDS STEADY AMID MIXED MACRO DATA Gold traded around the $1,860/oz mark on Friday, while the US 10y Treasury yield remained at 1.56% and EUR/USD stayed near 1.145. Gold found significant support last week from record US inflation readings, and it reached a five-month high, but the final day of the week brought mixed macro data, which dampened gold's momentum. The University of Michigan sentiment index for November came in at 66.8, its lowest reading since 2011 and well below the consensus of 72.5. Rising prices across a wide range of products has soured consumer sentiment, while the Fed remains dovish and has yet to come out with an effective policy to tackle inflation. Meanwhile, the US JOLTS job openings report indicated more than 10.4 mln job vacancies in September, above the consensus estimate of 10.3 mln. Increasing employment opportunities is a negative sign for bullion, as it could tilt the Fed into a hawkish move in light of rising inflation pressure. Minneapolis Fed President Neel Kashkari on Sunday gave another dovish signal, saying the Federal Reserve has no need to overreact to elevated prices, even if they are causing pain for American citizens, as they are likely to prove temporary. Gold is still trading near $1,860/oz as we write but appears to be trending lower. Today, the market awaits the Empire State manufacturing index for November. Pressure is coming from robust Chinese industrial production and retail sales data for October, which suggest that inflation isn't hindering China's economic recovery. Later this week we will see eurozone GDP for 3Q21, October retail sales and industrial production in the US, and several speeches by Fed officials, which might provide clues for future moves. We expect bullion to trade in a $1,830-1,860/oz range TALS MOSTLY HIGHER, CHINESE DATA IN FOCUSBase metals closed in the black on Friday, with zinc an exception. The three-month LME contract on copper was up 0.80% (+$77 from the previous day's close) to $9,711/tonne, aluminum added 1.50% (+$40) to $2,700/tonne, nickel was 1.11% higher (+$220) at $19,979/tonne, while zinc was down 0.35% (-$11) to $3,268/tonne.The gains continued as investors remained concerned over aluminum and copper scarcity given that LME inventories are still low. China's aluminum output steadied in October at circa 3.13 mln tonnes after a five-month retreat. This was in line with the data on coal output in China that showed a 7% m-o-m increase to 357 mln tonnes in October (+4% y-o-y). The price for the most actively traded coal contract in China is sliding below $130/tonne, yet this remains around the 200-day moving average. Last Wednesday, Chinese daily coal output finally grew to the authorities' target of 12 mln tonnes. We believe that output in November and December will at least remain at this desired level, which will drive coal quotes further down. If interventions on the supply side continue (via further increases in daily output, though there is a limit to this), prices might plunge even faster.Meanwhile, China's steel crude output dropped another 2% m-o-m in October to 72 mln tonnes (as much as 23% lower y-o-y), putting the cumulative total for 10m21 at 877 mln tonnes. The annual figure might well come in below last year's 1.1 bln tonnes. With iron ore inventories skyrocketing to 2019 levels, quotes are in retreat. We expect the downtrend to continue as the Olympic games approach, meaning that emissions control will likely remain as strict as ever. Yet, the fall might take a slower pace, as there are signs that iron ore deliveries by global miners have decreased lately. Poor weather conditions amid La Nina might affect imports, thus keeping iron ore quotes from a free fall.