Commodities Daily - September 8, 2021

> Oil ticks lower despite upbeat Chinese trade data; monthly EIA oil market report eyed. This morning, Brent is hovering below $72/bbl as oil investors look ahead to the monthly EIA oil market report, the Fed Beige book, and weekly API oil and refined product inventory data. In our view, the risks these releases pose to oil prices are skewed to the downside, so we think Brent could retest support at $71.3/bbl today (its current 100-day moving average), while resistance lies at $72.4/bbl (its 50-day moving average).> Gold down as US 10y yield hits recent high. Gold decreased from $1,820/oz to $1,795/oz yesterday, as the 10y US yield rose from 1.32% to 1.38% and the macro data was mixed. It is trading near $1,795/oz as we write. Today, the market awaits the Fed`s Beige Book publication and JOLTS Job openings for July. We expect bullion to test support at $1,790/oz today.> Metals mostly in the red; iron ore slides only to rebound on strong Chinese trade data. Base metals mostly finished lower yesterday, with zinc an exception. A military coup in Guinea and Chinese data will be in focus for the markets, while iron ore is volatile on lingering uncertainty amid Chinese intentions to curb steel production on the one hand but strong actual imports on the other.OIL TICKS LOWER DESPITE UPBEAT CHINESE TRADE DATA; MONTHLY EIA OIL MARKET REPORT EYEDYesterday, Brent slid $1.7/bbl to as low as $71.1/bbl before eventually settling at $71.69/bbl, $0.53/bbl below the previous settlement. It faced headwinds from a strong dollar, which more than offset bullish August trade data from China and continued production outages along the US Gulf Coast. Meanwhile, early yesterday revised data from the eurozone showed GDP growth of 2.2% Q-o-Q in 2Q21, better than the previous 2.0% reading, though the euro struggled to capitalize on this. On a more negative note, the ZEW economic sentiment index for the eurozone fell from 42.7 in August to 31.1 in September, belying expectations of a climb to 52.2. On Thursday, the ECB is set to announce policy decisions that could include a reduction to the pace of asset purchases under its Pandemic Emergency Purchase Program in 4Q21, which would support EUR/USD.Chinese crude imports, meanwhile, rose by 0.78 mln bpd m-o-m to 10.52 mln bpd in August, though they were still down 0.7 mln bpd y-o-y. Private refiners (those often referred to as "teapots") had received top-ups to their oil import quotas, which allowed for more cargo to clear customs. However, Chinese state majors took in less waterborne cargo, as the strategic petroleum stockpile release in July temporarily eased feedstock shortages. The government's regulatory crackdown on teapots over quotas trading and tax evasion is likely in its final stages, and while the government will hand out penalties to some of them, operations at most independent refineries should be able to return to normal. Meanwhile, the demand outlook has strengthened in China, which quickly contained the latest outbreak of the Delta variant, and the recent pick-up in spot purchases suggests that teapots are preparing to ramp up production during the peak demand season this autumn. More import quotas will be needed for 4Q21 arrivals, as teapots have already exhausted most of the stockpiles they built up over 2020, but we expect these quotas to be issued by October.This morning, Brent is hovering below $72/bbl as oil investors look ahead to the monthly EIA oil market report (which could contain a downward revision to the agency's previous global demand estimates), the Fed Beige book (anecdotal reporting on the current US economic situation) and weekly API oil and refined product inventory data (delayed by one day due to the US holiday on Monday). In our view, the risks these releases pose to oil prices are skewed to the downside, so we think Brent could retest support at $71.3/bbl today (its current 100-day moving average), while resistance lies at $72.4/bbl (its 50-day moving average). We expect the Beige Book to indicate that economic activity in the US expanded at a somewhat slower pace than in the prior period and also make note of the increased risks stemming from the Delta variant. Demand for air travel in the US has declined, spending on activities and entertainment has moderated, and constraints on production due to widespread shortages of materials and labor have continued to limit LD DOWN AS US 10Y YIELD HITS RECENT HIGHGold sharply decreased from $1,820/oz to $1,795/oz yesterday, down 1.5% in what was the largest one-day decline in a month. Meanwhile, the US 10y yield rose from 1.32% to 1.38% to reach its highest level since mid-July. Additionally, EUR/USD slid from 1.187 to 1.184, which created headwinds for bullion. The eurozone ZEW economic sentiment index for September showed a decline from the 42.7 point reading in August to 31.1. That could be attributable to the Delta coronavirus strain spreading in the eurozone and may also be among the reasons for the softer rhetoric from the ECB. The deterioration in the ZEW index pushed the euro - and gold - lower, despite the upbeat final GDP reading. The final eurozone GDP reading for 2Q21 showed a surprising increase to 2.2% Q-o-Q (the consensus and previous reading were 2.0%) and 14.3% y-o-y (13.6% consensus). Overall, gold was pressured by the global risk-off sentiment: the MSCI Europe declined 0.7% and S&P 500 lost 0.3%, as investors search for clues about the Fed`s tapering timeline. Gold is trading near 1,795/oz during Asian trading so far today. Today, the market awaits the Fed's Beige Book, which will provide the Fed`s view on the current US economic conditions. Also due for release today is the JOLTS Job openings for July. The market expects to see 10.049 mln job openings in July, reflecting the high employment readings in the middle of summer. Also on tap today are comments from Dallas Fed President Robert Kaplan and the 10y Treasury auction. We expect bullion to test support at $1,790/oz TALS MOSTLY IN THE RED; IRON ORE SLIDES ONLY TO REBOUND ON STRONG CHINESE TRADE DATAYesterday, base metals were mostly trading lower. The 3m LME contract on copper fell 1.21% (-$144 from the previous day's close) to settle at $9,341/tonne, while aluminum was down 1.08% (-$30) to $2,741/tonne and nickel 0.41% (-$80) to $19,543/tonne. Meanwhile, zinc closed higher by 0.85% (+$26) at $3,038/tonne.Following yesterday's slide from $145/tonne to $134/tonne, in early trading this morning iron ore has bounced back to $139/tonne in Singapore. The rebound owes to the news that Chinese imports of iron ore in August hit a new record despite Chinese authorities' efforts to cut steel production and tame commodity prices. Overall, China imported circa 98 mln tonnes of iron ore last month (+10% m-o-m) for $20 bln. That is partially attributable to higher imports from Brazil and possibly still-banned Australia as well. The key risk for iron ore is now potentially weaker Chinese demand in 2H21, should China push on with curbing steel production. We see iron ore dropping to the $120-130/tonne range later this year given these intentions to keep 2021 steel output not far from the 2020 levels.A military coup in Guinea remains in focus, with aluminum, following yesterday's losses, edging toward $2,800/tonne on the LME as we write. Further gains will be highly dependent on the scope of the turmoil.No major data releases are planned for today. Tomorrow will see Chinese inflation for August, as well as lending data, which is likely to give a hint about the next steps regarding potential stimulus