Commodities Daily - November 11, 2020

> Oil extends gains on vaccine hopes, mixed EIA monthly report, upbeat API update. The focus today is on OPEC's monthly report, after the downward revisions to the oil demand and non-OPEC supply estimates in the EIA report published yesterday. We note that these market outlooks could affect the decision at the upcoming OPEC+ meeting. After clearing technical resistance at $43.8/bbl, Brent could keep moving toward the next resistance level at $45.1/bbl. We see this as more likely than a break below $43.8/bbl, now support, which could trigger a fall to $42.9/bbl.> Gold stabilizes following Monday's slump; ECB president's address in focus. Trading should be light today given it is a holiday in the US. Markets will be following ECB President Christine Lagarde's address at an ECB forum, where she could provide some details about the new ECB monetary stimulus plan that is set to be rolled out in December to counter the effects of the second wave of the virus. On the back of this, we think gold might test the $1,894/oz mark today, though we think it is unlikely to break above that and head to $1,907/oz.OIL EXTENDS GAINS ON VACCINE HOPES, MIXED EIA MONTHLY REPORT, UPBEAT API UPDATEFront-month Brent traded near $42/bbl early yesterday, then started to climb, first to $43/bbl and then toward $44/bbl later in the day. It eventually settled at $43.61/bbl, fixing $1.21/bbl above the previous settlement. Oil prices continued to draw support from the Saudi energy minister's comment on Monday that OPEC+ could tweak its supply pact if demand slumps before a vaccine is available and also found support from the Vitol CEO's prediction yesterday of a 100 mln bbl stock draw over the next five months if OPEC+ holds off on the planned production increases. An even bigger boost came from the director of the US National Institute of Allergy and Infectious Diseases, Anthony Fauci, who said that doses of a vaccine will be available for those who need it most by December. This implies that next year people may be much more free to fly and thus strong upside to jet fuel demand (possibly a recovery to as much as 90% of the 7 mln bpd level of 2019), which has plummeted 2.8 mln bpd, or almost 40% y-o-y, this year. On the other hand, the vaccine news will likely complicate the decision on supply next year at the OPEC+ meeting on November 30-December 1.Later yesterday, oil investors turned their attention to the EIA monthly report, which was mixed. The EIA now forecasts that US crude oil production will fall by 0.86 mln bpd this year (sharper than the 0.80 mln bpd drop it projected last month) and 0.36 mln bpd in 2021 (versus 0.29 mln bpd). This comes despite the latest surge in the active US oil rig count. On the bearish side was the EIA's 0.29 mln bpd downgrade to its previous 2021 global demand forecast (now 98.8 mln bpd), although this year's figure was bumped up by 0.07 mln bpd.Overnight, the API reported a 5.1 mln bbl decrease in US crude stocks last week, to 482 mln bbl. The drawdown came amid a 0.1 mln bpd decrease in imports and despite a 0.07 mln bpd decrease in refinery runs. Crude stocks at Cushing fell 1.2 mln bbl. The refined product data was also bullish, showing a 3.3 mln bbl decrease in gasoline stocks and a 5.6 mln bbl decrease in distillate stocks. This pushed Brent to $44/bbl, where it is trading as we write. The EIA inventory report is due tomorrow at 19:00 Moscow time, a day later than usual due to today's Veterans Day holiday in the US, which does not affect WTI trading hours.After the downward revisions to the oil demand and non-OPEC supply estimates in the EIA report, the focus today is on OPEC's monthly report. We note that these market outlooks could affect the decision at the upcoming OPEC+ meeting. After clearing technical resistance at $43.8/bbl, Brent may keep moving toward the next resistance level at $45.1/bbl. We see this as more likely than a break below $43.8/bbl, which is now support, which could trigger a fall to $42.9/bbl.GOLD STABILIZES FOLLOWING MONDAY'S SLUMP; ECB PRESIDENT'S ADDRESS IN FOCUSGold consolidated around the $1,880/oz mark yesterday and remains there as we write after plunging from $1,960/oz to $1,850/oz on Monday. The coronavirus vaccine continues to draw investor attention, with production, distribution and most importantly effectiveness now coming under the spotlight. We believe that gold's positive fundamentals have not gone away, as the Fed is unlikely to alter its ultra-dovish monetary policy, despite the positive vaccine news, and the new round of US fiscal stimulus will provide strong support for gold. Moreover, EU negotiators yesterday reached a deal on long-term spending plans, moving a step closer to finalizing a landmark EUR1.8 trln ($2 trln) budget and stimulus accord, which will also be gold price supportive.Trading should be light today given it is a holiday in the US. Markets will be following ECB President Christine Lagarde's address at an ECB forum, where she could provide some details about the new ECB monetary stimulus plan that is set to be rolled out in December to counter the effects of the second wave of the virus. The bond-buying program may be significantly expanded. Indications of largesse from Lagarde today would buoy risk sentiment and also support gold. We therefore think gold could test the $1,894/oz mark today, although we think it is unlikely to break above that and head to $1,907/oz. As gold approaches $1,900/oz, dip buyers will become more confident and active, which could result in a swift lurch higher. For now, the risks of gold plummeting again toward strong support levels around $1,830-1,835/oz after Monday's slump are waning.