Commodities Daily - November 23, 2020

> Oil advances on US vaccination optimism ahead of November DM PMI data. We think today's data contains downside risks, especially for the services category given the recent tightening of coronavirus restrictions, and it could slightly offset the prevailing optimism related to the US vaccine, which could be rolled out within three weeks. We see solid support for Brent at $44.8/bbl, and now it has broken past resistance at $45.6/bbl, it could now consolidate within a $45.90-46.4/bbl range, depending on the November DM PMI data.> Gold prices begin to generate upward momentum on renewed stimulus hopes. As we write this morning, gold is consolidating near $1,875/oz ahead of the preliminary November IHS Markit PMIs for the eurozone and the US. We would expect gold to certainly remain above the $1,855/oz support level at the start of this week and we see little risk of a drop to the next support at $1,841/oz; a break above the $1,882/oz resistance level looks more likely, though gold will likely prove unable to gather the momentum to surge to the next resistance at $1,899/oz, the November 16 high.OIL ADVANCES ON US VACCINATION OPTIMISM AHEAD OF NOVEMBER DM PMI DATABrent was trading below the $44.5/bbl mark early on Friday but climbed toward the $45/bbl level in the afternoon and eventually closed at $44.96/bbl, up $0.76/bbl on the day. In after-hours trading it even peaked at $45.2/bbl. The successful Covid-19 vaccine trials remained the key source of optimism as they have boosted the prospects for a recovery in oil demand and increased the likelihood that at next week's meeting, OPEC+ will delay its planned 2 mln bpd production boost in January for at least three months. The prospects for a new stimulus package in the US have brightened. The Fed has agreed to return more than $400 bln in unused funds to the Treasury, meaning that these funds can be deployed in the form of stimulus (they had initially been earmarked to cover losses sustained under the Fed's refinancing programs but saw very little demand). Also supporting sentiment was US Senate Republican majority leader Mitch McConnell, who agreed to resume talks on the provision of more Covid-19 relief with cases surging across the US. The weekly Baker Hughes US oil rig count also buoyed prices on Friday, as it fell by 5 units after rising the previous week to its highest since May.Brent has surged to $45.7/bbl as we write after the head of the US "warp speed" vaccine acceleration program on Sunday told CNN that vaccinations will hopefully start on December 11-12, after Pfizer and BioNTech requested emergency authorization for their vaccine on Friday. Today, the oil market will eye the IHS Markit services, manufacturing and composite preliminary November PMIs for the eurozone and US. We think today's data contains downside risks, especially for the services category given the recent tightening of coronavirus restrictions, and it could slightly offset the prevailing optimism related to the US vaccine, which could be rolled out within three weeks. We see solid support for Brent at $44.8/bbl, and now that it has broken past resistance at $45.6/bbl, it could now consolidate within a $45.90-46.4/bbl range, depending on the November DM PMI data.This week, the US will be celebrating Thanksgiving on Thursday, which will affect the trading schedules for Brent and WTI and the release of weekly data from the CFTC and Baker Hughes. The API and EIA's US oil and refined product inventory updates will be unaffected, with investors becoming more nervous that oil tanks in Cushing, Oklahoma (the WTI pricing point) might fill to the brim again (they are currently about 81% full, according to the latest data), something that caused prices to crash earlier this year. We believe prices are unlikely to turn negative again, though we expect WTI to come under strong pressure compared with Brent. We think optimism surrounding the vaccine rollout, which is boosting the prospects for an oil demand recovery, is likely to keep Brent above the $45/bbl mark, a level which it has failed to break on numerous occasions recently.GOLD PRICES BEGIN TO GENERATE UPWARD MOMENTUM ON RENEWED STIMULUS HOPESHaving tested the $1,855/oz support level on Thursday (the last time was November 9, when prices slumped $110/oz), the gold price was paring losses on Friday, rising during the US session to $1,880/oz. The major driver was the news that US Treasury Secretary Steven Mnuchin would try to resume stimulus talks, a day after he had come out for cancelling unused emergency funds under Fed programs. Nonetheless, the disagreement with the Fed remains unresolved. Meanwhile, global risk sentiment is being been supported by headlines about the first mass vaccination programs in the US and UK, which could start in a matter of weeks, while a number of major European countries are planning to ease lockdown measures before Christmas.As we write this morning, gold is consolidating near $1,875/oz ahead of the preliminary November IHS Markit PMIs for the eurozone and US. The services readings are expected to be worse than in October. Nevertheless, a beat on market forecasts is still possible, as happened in October when the second wave of the pandemic was already in full swing. The manufacturing PMIs, on the other hand, are expected to rise. Against this backdrop, we would expect gold to certainly remain above the $1,855/oz support level at the start of this week and we see little risk of a drop to the next support at $1,841/oz; a break above the $1,882/oz resistance level looks more likely, though gold will likely prove unable to gather the momentum to surge to the next resistance at $1,899/oz, the November 16 high.There are few important macro, political and company events scheduled for this week. European markets will be watching the Brexit negotiations. Globally, the battle with the pandemic will remain in focus, while headlines about US and EU fiscal stimulus plans are expected to grab market attention, as well as the activities of the outgoing and incoming US presidents. Bloomberg and others have reported that President-elect Joe Biden will nominate his longtime advisor Antony Blinken as secretary of state. This supports expectations that Biden will be looking to revive the US's global alliances, and may also signal a more interventionist approach to foreign policy than seen during the Trump administration. Various media wires indicate more top nominees for Biden's cabinet will be announced tomorrow. Fed minutes and the ECB's Financial Stability Review are also due tomorrow. ECB minutes are due Thursday, when the US market will be closed for the Thanksgiving holiday, followed by the Black Friday global shopping "holiday."