Commodities Daily - September 7, 2021

> Oil trades sideways with focus on Hurricane Ida aftermath, Chinese August trade data. This morning, Brent is trading near $71.5/bbl, with traders digesting Chinese trade data that showed export and import growth in August above the consensus. Crude imports rose to a five-month high after private refiners received more quotas earlier in the month. Today, we think Brent will continue to trade sideways, oscillating around its 50-day moving average, which is currently near $72.5/bbl. In our view, it is unlikely to go all the way to retest resistance at $73.7/bbl.> Lacking support, gold retreats from recent highs. Gold eased from $1,830/oz to $1,825/oz yesterday, while EUR/USD held steady near 1.187. Bullion is trading near $1,820/oz as we write. Today, the market awaits the ZEW economic survey for September and the final reading of 2Q21 eurozone GDP. We expect bullion to remain within the $1,810-1,830/oz range today.> Base metals mixed, with aluminum at decade highs. Base metals were mixed yesterday ahead of the Chinese inflation and credit data due later this week. Aluminum surged to a 10-year high, as a military coup in Guinea threatens to disrupt the supply of bauxite from the country.OIL TRADES SIDEWAYS WITH FOCUS ON HURRICANE IDA AFTERMATH, CHINESE AUGUST TRADE DATAYesterday, front-month Brent seesawed within a $71.5-72.8/bbl range after opening weaker owing to Saudi Arabia's having cut prices of its crude to Asia next month by more than expected. This caught traders by surprise and raised concerns about the short-term demand picture. It also increased competition among producers amid a desire to retain market share. Brent eventually settled at $72.22/bbl, fixing $0.39/bbl below the previous settlement. This morning, it is trading near $71.5/bbl, with investors digesting China's trade data that showed export and import growth in August having exceeded consensus estimates, with crude imports rising to a five-month high after private refiners received more quotas earlier in the month. Traders are also still closely watching for the return of oil production and refineries affected by Hurricane Ida. Many in the crude market are worried that the lost refining demand could significantly surpass the volume of crude oil production shut. However, given the boost that oil refining margins have received - because end-user demand for refined products has been minimally affected - other refiners (and not only in the US) will be raising runs to make up for the lost Louisiana refining capacity. Hefty draws of stockpiles are unavoidable, so refinery runs elsewhere must rise to offset the loss in refined product supply, especially as product inventories in New York and ARA markets are already tight. So, ultimately Ida is bullish for crude oil, especially for Brent (as WTI faces indirect headwinds from the lost US Gulf Coast demand for now). We also note that although there is plenty of spare refining capacity globally to make up for the US losses, this implies the need for even higher refining margins to incentivize ramping-up refinery runs. Following the hurricane, market balances across crude and refined products got a whole lot tighter. In light of this, the subdued price rally is somewhat baffling. Even the move higher in calendar spreads has been relatively muted. Going into winter, where soaring gas prices are already boosting liquids burn, such as fuel oil in the power sector, oil prices and calendar spreads should both head higher from here. As for today, we think Brent will continue to trade sideways, oscillating around its 50-day moving average, which is currently near $72.5/bbl. In our view, it is unlikely to go all the way to retest resistance at $73.7/ CKING SUPPORT, GOLD RETREATS FROM RECENT HIGHS Gold retreated from $1,830/oz to $1,825/oz yesterday while EUR/USD held steady near 1.187. The US markets were closed for Labor Day, which limited gold's moves. The metal lacked clear triggers and drifted lower, likely due to an improvement in the situation with the Delta strain in the US. Yesterday, new cases slowed to 76k, while the seven-day moving average plunged from 161k to 132k, similar to the levels at the beginning of August. This fueled hope for the US economy, with investors starting to guess when tapering will begin. The high levels of Covid-19 infections over the past month have weighed on the US economy and especially on the labor market. Nonfarm payrolls for August were way below expectations and may have delayed the tapering announcement from the September 21-22 FOMC meeting to the November 2-3 meeting. Gold is trading near $1,820/oz as we write amid global dollar strength and a rise in the 10y US Treasury yield from 1.32% to 1.35%. Today, the market awaits the ZEW economic survey for September and the final reading of 2Q21 eurozone GDP. The consensus GDP growth estimates stand at 2% Q-o-Q and 13.6% y-o-y. The ZEW index could worsen on the back of the spread of the Delta strain in eurozone. A weak print (below the August reading of 42.7 points) could fuel cautious rhetoric at the ECB meeting on Thursday. We expect bullion to stick within the $1,810-1,830/oz range SE METALS MIXED, WITH ALUMINUM AT DECADE HIGHSYesterday, base metals were mixed. Three-month LME contracts on copper edged down 0.13% (-$13/tonne from the previous close) to settle at $9,455/tonne, aluminum rose 2.00% (+$54/tonne) to $2,771/tonne, nickel fell 1.32% (-$262/tonne) to $19,623/tonne and zinc climbed 0.36% (+$10/tonne) to $3,013/tonne.Aluminum was in focus yesterday, as prices rose to a 10-year high of $2,780/tonne during the course of the trading session. The surge came as a result of a military coup in mineral-rich Guinea. The African country accounts for around 25% of the global supply of bauxite, which is crucial for aluminum production. With President Alpha Conde under arrest and the constitution suspended, the lightweight metal's global supply chain is currently under threat. Since the price surge was driven in part by traders' bets on a potential supply chain disruption, the move was thus speculative in nature. Depending on how things play out in Guinea, we could see aluminum make another push higher toward $3,000/tonne, further diverging from fundamentals and other base metals.Meanwhile, Chinese exports and imports in August turned out to be much stronger than had been expected thanks to strong demand and eased supply shortages (which we expect to ease further in 4Q21). Base metals have been trading mixed today following the Chinese trade data, with investors looking ahead to Chinese inflation figures on Thursday and August credit data throughout the week. Data on copper exports from Chile in August is scheduled for release today, so we could see elevated volatility in copper prices. We think the three-month LME contract could take a step up to $9,530/