Commodities Daily - February 8, 2021

> Brent trading near $60/bbl with data-rich week ahead. Today looks rather uneventful, with markets awaiting December German industrial production data and an interview by the Egyptian oil minister to Bloomberg TV. This week, however, will see the EIA, OPEC and IEA monthly reports. Even though Brent remains technically overbought, we see new YTD highs being reached today, supported by the passage of Biden's $1.9 trln Covid relief package looking more certain, US Treasury Secretary Janet Yellen lobbying for more stimulus and coronavirus cases slowing across the globe. We think that Brent today will break above the $60.1/bbl resistance level and toward at least the lower end of the $60.4-60.9/bbl technical range. Support is at $59.6/bbl, with a fall, which would be unexpected, opening the way toward the $59.3/bbl level.> Gold recovers as dollar weakens amid rally in US Treasury yields. Gold is trading sideways at $1,810-1,820/oz as we write, with investors still closely monitoring the situation around the US stimulus plan and vaccination progress, especially in Europe, which is lagging behind. Support remains at $1,801/oz, which we do not expect to be broken this week. We think a break above $1,818/oz resistance is more likely and could pave the way to $1,840/oz.BRENT TRADING NEAR $60/BBL WITH DATA-RICH WEEK AHEADAfter trading in a $59.00-59.50/bbl range early on Friday, front-month Brent inched higher and consolidated around $59.50/bbl for the rest of the day. It eventually settled at $59.34/bbl, fixing $0.50/bbl above the previous settlement. The main oil market story was a Bloomberg report that the number of vessels carrying crude oil going toward China jumped to a six-month high of 127 on Friday. Fully laden, they could deliver in excess of 250 mln bbl - the last time the number was higher was only after WTI plunged below zero last year. The report was especially upbeat given concerns about limited travel driving the Chinese Lunar New Year holiday. Meanwhile, on Friday the Baker Hughes US active oil rig count rose by four to 299 last week, the highest level since May. In addition, the weaker than expected US jobs report did not cause elevated oil market volatility. In January, payrolls rose by 49k versus the 105k expansion expected, while the data for December was revised downward for a 227k contraction in payrolls versus the previous 140k. This reinforced the fragility of the recovery as the pandemic lingers and seemed to bolster the case for further stimulus spending. Also on Friday the House of Representatives passed an updated budget resolution that paves the way for Democrats to push through Biden's $1.9 trln Covid relief package without Republican support.Today looks rather uneventful, with markets awaiting December German industrial production data and an interview by the Egyptian oil minister to Bloomberg TV (Egypt is actively buying derivative contracts to protect itself against a rise in oil costs). This week will see the EIA, OPEC and IEA monthly reports, with EIA the first, coming out tomorrow. Even though Brent remains technically overbought, we see new YTD highs being reached today, supported by the passage of Biden's $1.9 trln Covid relief package looking more certain, US Treasury Secretary Janet Yellen lobbying for more stimulus and coronavirus cases slowing across the globe. On the US Sunday talk shows, Yellen said that the US could return to full employment in 2022 if a robust enough relief package was passed now. We think that Brent today will break above the $60.1/bbl resistance level and toward at least the lower end of the $60.4-60.9/bbl technical range. Support is at $59.6/bbl, with a fall, which would be unexpected, opening the way toward the $59.3/bbl level.GOLD RECOVERS AS DOLLAR WEAKENS AMID RALLY IN US TREASURY YIELDSGold was trading around $1,795/oz on Friday before climbing to $1,815/oz, mirroring positive momentum in EUR/USD, which pared back some of last week's losses in surging from 1.195 to 1.205. Gold's advance came amid a further rally in 10y Treasury yields, this time to 1.19%. This did not have a strong impact on gold, in our view, as real yields (which are what gold investors primarily follow) remained mostly flat, with the pace of US inflation as implied by the bond market advancing to its highest level since 2014 amid a rally in oil prices. Rising Treasury yields are likely to remain the biggest concern for gold and will largely depend upon the progress in Biden's $1.9 trln coronavirus relief package. On Friday, the House of Representatives passed an updated budget resolution sent over from the Senate that paves the way for Democrats to push through the package without needing Republican support. Democrats could pass the major stimulus legislation on their own as long as they remain united.Friday's nonfarm payrolls data showed a 49k increase last month versus 105k predicted, with the December data revised to show 227k jobs lost instead of 140k, as previously reported. This indicated the fragility of the economic recovery, causing investors to place more confidence in the US stimulus being passed. This weighed on the dollar and supported gold prices on Friday. As we write, gold is trading sideways at $1,810-1,820/oz, with investors still closely monitoring the situation around the US stimulus plan and vaccination progress, especially in Europe, which is lagging behind. ECB President Christine Lagarde is scheduled to speak in the European parliament today and new European Commission economic forecasts are due on Thursday. With the global macro calendar being a bit light this week, remarks from US Fed Chair Jerome Powell on Wednesday will likely generate headlines. US January CPI data on Wednesday will also be of major importance and could show a slight pickup in inflation, which would be positive for gold. Support remains at $1,801/oz, which we do not expect to be broken this week. We think a break above $1,818/oz resistance is more likely and could pave the way to $1,840/oz.