Commodities Daily - January 13, 2020

> Oil inches lower amid downbeat US employment report and reduction in US-Iran tensions. Today, oil investors await UK GDP and industrial production data for November (12:30 Moscow time), which is likely to boost volatility in the FTSE 100 as well as in oil prices. We think Brent is likely to stick close to the $65/bbl mark today. The monthly oil market reports from the EIA, OPEC and IEA as well as US-China trade deal signing ceremony will be the main highlights this week, and we expect them to be oil-price supportive.> Gold consolidates near $1,550/oz as investors brace for signing of US-China trade deal. Today's global agenda is light on important events and data releases. The technical picture for this week suggests that if global risk appetite persists, gold could slide toward $1,525/oz, assuming it is first able to break below support at $1,545/oz.OIL INCHES LOWER AMID DOWNBEAT US EMPLOYMENT REPORT AND REDUCTION IN US-IRAN TENSIONSFront-month Brent spent Friday's session fluctuating within the $64.9-65.7/bbl range after sliding from $71/bbl in the middle of the week amid a bearish EIA inventory report and the de-escalation in Iran-US tensions. It eventually settled at $64.98/bbl, down $0.39/bbl from the previous settlement. Brent hit an intraday high of almost $65.7/bbl on Friday after the US announced a new raft of economic sanctions against several senior Iranian officials and major companies (sanctioned sectors of the Iranian economy include construction, manufacturing, textiles and mining) in response to Iran's missile strike last week against Iraqi bases housing US troops. However, Friday's main highlight was December's US nonfarm payrolls report, which showed that payrolls increased by 145k last month, below the Bloomberg forecast of 160k and the previous month's revised figure of 256k; the latter figure was boosted by the return of 46k striking GM workers. The report pressured Brent, which dipped toward the $65/bbl mark following the release, which was more downbeat than expected. However, the US economy is still creating more than enough jobs to keep pace with population growth and is also sufficient to keep the country's longest economic expansion in history on track in the face of a manufacturing sector downturn due to the trade disputes. An upbeat Baker Hughes report, which showed an 11-unit weekly decrease in the US active rig count to 659 (the third consecutive drop), provided a mild tailwind for oil later in the day.This morning, Brent is fluctuating around the $65/bbl mark, with the market this week set to digest the monthly oil market reports from the EIA, OPEC and IEA. Preliminary findings by Reuters and Bloomberg suggest that OPEC production fell m-o-m in December due to improved compliance with the OPEC+ deal from Iraq and Nigeria. It is essential for both of these countries (which failed to comply with their quotas last year) to cut output in line with OPEC+'s respective targets to give the market a chance to balance supply with demand in 1Q20. It is very likely that all three major analytical bodies will confirm a m-o-m drop in OPEC production in December, which should support the oil price. We could see some of them revising their oil demand growth forecasts higher for this year now that the US and China have agreed on an initial trade deal. According to Reuters, the US government has invited at least 200 people to the signing ceremony on Wednesday although the two nations have reportedly yet to finalize all the details (including the translation of the final document). We think the main downside risk for oil prices this week is the weekly EIA update on US oil inventories. Technical analysis suggests that Brent has a strong support at $63.95/bbl if it breaks below its 50d moving average of $64.37/bbl and the 200d moving average of $64.29/bbl (both of the latter figures are precise and are valid for today only and will adjust slightly this week). Today, oil investors await UK GDP and industrial production data for November (12:30 Moscow time), which is likely to boost volatility in the FTSE 100 as well as in oil prices. We think Brent is likely to stick close to the $65/bbl mark LD CONSOLIDATES NEAR $1,550/OZ AS INVESTORS BRACE FOR SIGNING OF US-CHINA TRADE DEALAfter sliding from $1,610/oz to $1,550/oz last Thursday as both Iran and the US signaled de-escalation, gold has started to consolidate near the latter level. As we note in the oil section above, the main global market highlight on Friday was the December jobs report from the US, which showed a slowdown in job growth (nonfarm payrolls increased by 145k last month, missing the Bloomberg consensus forecast of 160k) after the surge in November (by 256k, according to the revised data, driven by the return of some 46k striking GM workers). The overall downbeat report sent US Treasury yields lower and was supportive for EUR/USD and gold, which rallied to $1,560/oz during the US session on Friday. We note, however, that the US economy is still creating more than enough jobs to keep up with population growth, which should help keep it on track to extend its longest expansion in history in the face of the trade war-driven downturn in manufacturing. During the Asian trading session this morning, gold shed most of Friday's gains and was headed back toward the $1,550/oz mark amid a rise in global stock markets as investors braced for the US-China trade deal ceremony. According to Reuters, the Trump administration has invited at least 200 people to the January 15 signing ceremony, though the two nations have reportedly not yet finalized all the details, as well as the translation of the document. Today's global agenda is light on important events and data releases. The technical picture for this week suggests that if global risk appetite persists, gold could slide toward $1,525/oz, assuming it is first able to break below support at $1,545/