Commodities Daily - February 7, 2019

> Oil prices rise after EIA report defies bearish expectations; dollar and stock market providing headwinds. This morning, Brent is moving downward amid weakness in global stock markets and news from Libya that the government has retaken control of El Sharara, the country's largest oilfield with output of 0.3 mln bpd, from the tribesmen and security forces that seized it on December 8 and shut it down. Today, investors await a BoE rate decision and German industrial production data. We think Brent is likely to retreat below the $62/bbl mark and slide toward $61/bbl given the developments in Libya and the headwinds from the FX and stock markets.> Gold prices drop $10/oz yesterday evening on dollar strengthening. Comments by Fed Chairman Powell emphasizing the US economy's strength gave the dollar additional support yesterday and led gold prices to tumble. Today, the European Commission's economic forecasts are likely to pressure the euro, which would be negative for gold. In that case, it could test the $1,300/oz level.> Base metals trading sideways ahead of next round of US-China talks. Prices are mixed this morning, with aluminum and zinc trading slightly higher but nickel and copper just below level. Markets are focused on the next round of US-China trade talks scheduled for next week, as well as a hearing in the US Congress about cancellation of the Rusal sanctions.