Commodities Daily - February 16, 2018

Dollar performance continues to impact oil prices; Baker Hughes rig count data looming. We think the Baker and Hughes US rig count data will attract higher than normal attention, especially in the wake of a very strong performance last week. The threat of above-forecast non-OPEC supply growth (driven by the US) has recently been feeding more strongly into oil prices, and even a moderate increase in the rig count is likely to push Brent below $64/bbl today. Oil is also likely to exhibit increased sensitivity to any signs of dollar strengthening, sliding on profit taking.
Gold prices inch higher after a low volatile session. Many Asian markets remain closed for an extended holiday, while US markets will be shut on Monday. Today, investors await the University of Michigan sentiment index (18:00 Moscow time). Our FX team emphasizes the importance of watching the inflation expectations component of the survey for signs of life. Given the long weekend, some profit taking could occur, and we expect EUR/USD to stabilize near 1.254, which should support gold around the $1,355/oz mark.