Commodities Daily - December 20, 2019

> Oil ticks higher on upbeat US-China rhetoric; more US data on the radar. Today, oil investors will be focused mainly on data, including the third print of US 3Q19 GDP and US personal income and spending data (both at 16:30 Moscow time), as well as the Baker Hughes rig counts. We expect GDP growth to be confirmed at 2.1% (after being revised upward from 1.9%), but the November personal income and spending data is likely to disappoint following the rather discouraging November retail sales numbers. Any signs of weak consumer demand in 4Q19 would weigh on oil prices, causing Brent, which has failed to hold above technical resistance at $66.7/bbl, to pare some of its recent gains.> Gold prices stable following yesterday's weak US macro data. A set of weak data from the US yesterday (initial jobless claims, existing home sales and the Philly Fed index) spurred elevated volatility ($9/oz intraday) in gold prices. Gold is currently hovering around the $1,480/oz mark. Today promises to be a busy day: the UK Parliament will vote on PM Boris Johnson's Brexit plan and the US will issue its third reading for 3Q19 GDP. A number of other macro releases are also due from the eurozone and US. Today is also a quadruple witching in the US, which may spur some additional volatility.OIL TICKS HIGHER ON UPBEAT US-CHINA RHETORIC; MORE US DATA ON THE RADARDuring the first half of the day yesterday, front-month Brent oscillated around $66.2/bbl. It then started to generate positive momentum heading into the Wall Street session as major stock indexes explored new record highs. It eventually hit an intraday high of $66.78/bbl in early US trading before ultimately settling at $66.54/bbl, fixing $0.37/bbl above the previous settlement. A Chinese Commerce Ministry spokesman inspired mild optimism in markets early yesterday by saying that the US-China trade teams are in close contact regarding the signing of the phase one agreement. However, he also highlighted that there is no more information available at this stage on the text of the agreement. Later on, China unveiled a list of import tariff exemptions for six chemical and several niche oil products from the US, underlining the recent US-China rapprochement. US Treasury Secretary Steven Mnuchin also confirmed recent reports that the phase one deal would be signed at the beginning of January, noting that the agreement is currently being translated. It is also important to note that the latest reporting suggests that Chinese President Xi Jinping is not planning to attend the Davos World Economic Forum (which will be held on January 21-24, when the Chinese New Year celebrations begin), meaning that a face-to-face meeting with Donald Trump is unlikely. We would thus expect the agreement to be signed in Washington by Chinese Vice Premier Liu He and US Trade Representative Robert Lighthizer.Most of the US macro data released yesterday was downbeat, which weighed on oil prices somewhat later in the day. The Philadelphia Fed manufacturing index (a regional business activity gauge) slumped to a six-month low in December amid general weakness in manufacturing and a slowdown in investment and global trade. US weekly jobless claims and US home sales were also downbeat, missing consensus estimates. Neither of these data points, in our view, indicates a strong shift in market conditions, as claims data is volatile, especially during the holiday season, and there is a shortage of homes for sale after the three Fed rate cuts this year. Today, oil investors will be focused mainly on data, including the third print of US 3Q19 GDP and US personal income and spending data (both at 16:30 Moscow time), as well as the Baker Hughes rig counts. We expect GDP growth to be confirmed at 2.1% (after being revised upward from 1.9%), but the November personal income and spending data is likely to disappoint following the rather discouraging November retail sales numbers. Any signs of weak consumer demand in 4Q19 would weigh on oil prices, causing Brent, which has failed to hold above technical resistance at $66.7/bbl, to pare some of its recent LD PRICES STABLE FOLLOWING YESTERDAY'S WEAK US MACRO DATAGold prices started moving lower from the get-go yesterday. However, a turnaround in gold ensued thanks to the US initial jobless claims print (234k versus the consensus of 225k) and the Philly Fed index (came in below the consensus and at a six-month low of 0.3). The positive trend in gold continued after the existing homes data (down 1.7%, versus the consensus of a 0.4% drop). Gold ended up climbing 0.2% for the day and is trading at around the $1,480/oz mark as of this writing. A busy schedule is lined up today. The UK Parliament will vote on PM Boris Johnson's Brexit plan and the US will issue its third reading for 3Q19 GDP. A number of other macro releases are also due from the eurozone and US. Today is also a quadruple witching in the US, which may spur some additional