Commodities Daily - August 31, 2020

> Oil prices steady with EIA-914 report in focus today. Spanish, Italian and German CPIs, as well as 2Q20 Italian GDP, will be released early today, but the second half of the day promises to be quiet on the data front. Oil investors will be digesting the EIA-914 report on US monthly crude oil production. The June weekly data suggests that US production averaged 10.9 mln bpd in the month, though we are skeptical, as the oil rig count has been falling. We think a much lower June figure would be supportive for oil prices later in the day today. This, together with possible support from prevailing risk-on trading, should boost the new front-month Brent contract for November to trade in a $46.5-$47.0/bbl technical range with support at $45.8/bbl.> Gold prices stable at around $1,960/oz as investment demand remains in place. Gold prices advanced 1.8% on Friday to approach the $1,970/oz mark. This morning, however, gold is under pressure despite the ongoing strong demand from ETFs. The CFTC data for the week ending August 25 shows a drop in long positions of hedge funds in bullion of 16.3k contracts to 178k. However, short positions remained practically the same at 39.7k. Today is a bank holiday in the UK. In focus will be a speech on monetary policy by Fed Vice Chairman Richard Clarida.OIL PRICES STEADY WITH EIA-914 REPORT IN FOCUS TODAYOn Friday, the previous front-month Brent contract for October traded flat, exhibiting very low volatility, and eventually settled at $45.05/bbl, $0.04/bbl below the previous settlement. The current front-month contract for November, meanwhile, trended slightly higher late in the day and finished at $45.81/bbl, $0.21/bbl above the previous settlement. A supportive factor was a reported three-unit decrease in the weekly active US oil rig count to 180, according to Baker Hughes, after a rather surprising 11-unit increase the week before. In addition, US Gulf Coast refineries began the restarting process after Hurricane Laura passed, with facilities largely having avoided the worst of the storm and the oil market impact having been relatively muted.This morning, November Brent is trending higher toward the $46.5/bbl mark. A mild tailwind has come from Chinese August PMI data, released today, which seemed to point to the economic recovery remaining on track, boosted by a strong services performance. The official nonmanufacturing index rose to 55.2 from 54.2 in July, while the manufacturing PMI edged down to 51.0 from 51.1. However, the momentum could prove short-lived, as the second half of today promises little in terms of important global economic data. Oil investors will be digesting the EIA-914 report on US monthly crude oil production, comparing the actual numbers for June to the production implied by the EIA's weekly inventory reports. The last 914 report showed a whopping 2 mln bpd m-o-m decrease in May to 10 mln bpd. The June weekly data suggests that US production averaged 10.9 mln bpd in the month, though we are skeptical as the oil rig count has been falling. We think a much lower June figure would be supportive for oil prices later in the day today. This, together with possible support from prevailing risk-on trading, should support the new front-month Brent contract for November in a $46.5-47.0/bbl technical range with support at $45.8/ LD PRICES STABLE AT AROUND $1,960/OZ AS INVESTMENT DEMAND REMAINS IN PLACEGold prices advanced 1.8% on Friday amid significant weakness in the dollar. The dollar is pushing to retrace those losses so far today, which has exerted some pressure on gold, which is trading at $1,960/oz as we write. Investment demand for gold remains significant. According to Bloomberg data, aggregate ETF positions in gold reached 108.8 mln oz last week. Hedge funds, meanwhile, have been gradually taking profit in open long positions. The CFTC data for the week ending August 25 shows a drop in long positions in bullion of 16.3k contracts to 178k. However, short positions remained practically the same at 39.7k. Today is bank holiday in the UK. In focus will be a speech by Fed Vice Chairman Richard Clarida, who will talk about monetary policy. We expect his words to buoy gold, which could push higher to the $1,975/oz mark