Commodities Daily - February 7, 2020

> Oil remains range-bound as investors brace for deeper OPEC+ cuts; nonfarm payrolls data eyed. Today's US jobs report (16:30 Moscow time) could surprise to the upside (as the mild winter may have boosted construction jobs) and support risk assets. We think the technical upside for Brent is limited to $56.6/bbl, though we think Brent is more likely to wrestle with $54.7/bbl support today amid OPEC+ indecision and the ongoing spread of the coronavirus.> Gold steady despite renewed coronavirus concerns. Early this morning, reports emerged from China that a number of domestic companies will not relaunch production until February 16-17 at the earliest. This sparked a wave of safe-haven demand that helped push gold to a $5/oz gain at the open in Asia. As we write, gold is hovering just below $1,565/oz. We expect it to hold within the $1,560-1,570/oz range throughout the day. Today's main event data-wise will be the January US jobs report at 16:30 Moscow time. The PBoC is also scheduled to publish an update on its FX and gold reserves.OIL REMAINS RANGE-BOUND AS INVESTORS BRACE FOR DEEPER OPEC+ CUTS; NONFARM PAYROLLS DATA EYEDFront-month Brent was trading near the $56.5/bbl mark during yesterday's Asian trading session before shedding in excess of $2/bbl during the day and hitting an intraday low of $54.25/bbl during early trading in the US. It eventually settled at $54.93/bbl, $0.35/bbl below the previous settlement. Following a lengthy correction in late January, with Brent sliding almost $12/bbl, the North Sea benchmark has consolidated within the $54-56/bbl range this month amid expectations that OPEC+ will attempt to offset the drop in demand from China by cutting production more deeply. Yesterday, the OPEC+ joint technical committee recommended that OPEC+ ministers should agree to cut output by an additional 0.6 mln bpd to manage market resupply risks. One OPEC source told Reuters that if the 0.6 mln bpd figure is agreed to by all members, it will come into force immediately and run until June. The general market consensus is that such a move should be entirely sufficient (especially given 1 mln bpd of supply losses from Libya) to offset the drop in Chinese demand. However, the announcement of the technical committee recommendation failed to cheer up the oil market and even weighed on prices. The main headwind came from Russia, which has reportedly asked for more time for consultations following widespread reports that it does not support deeper cuts. Later in the day, the Russian foreign minister said that Russian supports the idea of an extra 0.6 mln bpd cut, which provided a positive tone and is supporting Brent near the $55/bbl mark today. This morning, Russia's energy minister said Russia will decide on its position for the OPEC+ meeting next week. The OPEC+ ministers have yet to decide on whether to bring forward their next policy meeting from early March to February. In our view, amid the damage to sentiment, the risk of prolonged indecision from OPEC+ on deeper cuts could see Brent swiftly escape from its current fragile equilibrium at $54-56/bbl into the $52.7-53.7/bbl technical corridor.Meanwhile, attention is turning to the physical market, where China National Offshore Oil Corporation has declared a force majeure on LNG contracts amid the rapid spread of the coronavirus. Oil suppliers fear the same risks and are considering diverting shipments away from China, with Europe being the likely main destination for their cargoes and set to be awash with oil in the month to come. Today's US jobs report (16:30 Moscow time) could surprise to the upside (as the mild winter may have boosted construction jobs) and support risk assets. We think the technical upside for Brent is limited to $56.6/bbl, though we think Brent is more likely to wrestle with $54.7/bbl support today amid OPEC+ indecision and the ongoing spread of the LD STEADY DESPITE RENEWED CORONAVIRUS CONCERNSGold closed 0.2% higher yesterday after a fairly uneventful day of trading. A slight beat on US weekly jobless claims (202k versus an expected 215k) failed to push prices lower. Early this morning, reports emerged from China that a number of domestic companies will not relaunch production until February 16-17 at the earliest. Several international companies, including Toyota and Honda, also announced that they are going to keep plants in China closed. Not long ago, many market participants had assumed that companies operating in regions affected by the coronavirus would be able to get back up and running by February 9/10. Now, it is starting to look like the shutdowns will last considerably longer. These reports sparked a wave of safe-haven demand, which helped push gold to a $5/oz gain at the open in Asia this morning. Today's main event data-wise will be the January US jobs report at 16:30 Moscow time. The PBoC is also scheduled to publish an update on its FX and gold reserves. As we write, gold is hovering just below $1,565/oz. We expect it to hold within the $1,560-1,570/oz range throughout the