Commodities Daily - November 26, 2020

> Oil inches higher amid mixed EIA report and dollar weakening. Volatility will likely remain low today as the US is celebrating Thanksgiving, with WTI trading on the CME due to close at 21:00 Moscow time and resume overnight, while ICE Brent trading is to close at 21:30 Moscow time. We expect Brent to stay within the current $48-49/bbl range today, with further gains capped by waning support from a rise in EUR/USD following a downbeat German consumer confidence survey for December. Also acting as a drag is the fact that Iraq is voicing frustration over OPEC's "one-size-fits-all" model ahead of the major OPEC+ conference.> Gold stabilizes above $1,800/oz after US data disappoints. We expect no major market moves today due to the US public holiday. The minutes from the ECB's October meeting will be in focus and should shed light on the prospects for new stimulus and an expected increase in the QE program in December to support the economy during the second wave of the virus. This could provide a slight boost for gold today. Bullion continues to trade above its 200d MA support level, which currently stands at $1,799/oz. We expect that gold is likely to experience a brief consolidation period (following its slump earlier this week) before targeting the $1,827/oz resistance mark.OIL INCHES HIGHER AMID MIXED EIA REPORT AND DOLLAR WEAKENINGBrent opened below $48/bbl yesterday and advanced to the $48.5/bbl mark before trading near $48.2/bbl ahead of the weekly EIA inventory update, which showed a 0.75 mln bbl draw in US crude oil stocks to 488.7 mln bbl last week. The drawdown came amid a 0.42 mln bpd increase in refinery inputs to 14.26 mln bpd (as refiners geared up for Thanksgiving, when people usually travel), a 0.08 mln bpd increase in exports to 2.83 mln bpd and a 0.03 mln bpd decline in imports to 5.23 mln bpd. A 0.1 mln bpd increase in crude production to 11 mln bpd was insufficient to offset the overall draw. The EIA's refined product data was mixed: gasoline stocks rose 2.18 mln bbl to 230.1 mln bbl and distillate stocks eased 1.44 mln bbl to 142.6 mln bbl. Gasoline stock builds are common ahead of Thanksgiving, but this year Covid has curbed travel, with gasoline demand last week falling to its lowest level since June as the latest measures to slow the spread have started to curtail car travel. Total commercial petroleum stockpiles (oil and refined products combined, excluding strategic petroleum reserves) fell a small 1.07 mln bbl, also driven by small draws in other refined product categories. Following the release, Brent exhibited no elevated volatility, although amid tailwinds from further dollar weakening as the FOMC minutes hinted at more QE, Brent rose to $49/bbl later in the day, eventually settling at $48.61/bbl, up $0.75/bbl on the day.Volatility will likely remain low today as the US is celebrating Thanksgiving, with WTI trading on the CME due to close at 21:00 Moscow time and resume overnight, while ICE Brent trading is to close at 21:30 Moscow time. We expect Brent to stay within the current $48-49/bbl range today, with further gains capped by waning support from a rise in EUR/USD following a downbeat German consumer confidence survey for December. Also acting as a drag is the fact that Iraq (which has breached its production cut deal quota on several occasions) voicing frustration over what it sees as OPEC's failure to take members' economic and political conditions into account when deciding production quotas. Iraq's finance minister yesterday said that "we have reached the limit of our ability and willingness to accept a policy of one size fits all." He added that OPEC's approach "has to be more nuanced and it has to be related to the per-capita income of people, the presence of sovereign wealth funds, none of which we have." Oil bulls will however welcome the fact that the official was not speaking on behalf of the oil ministry, which decides on OPEC matters. This is not the only recent frustration within OPEC+: the UAE was reportedly not long ago privately saying that it was contemplating leaving OPEC, while Nigeria has tried to get some of its oil blends excluded from its quota. We think these factors are unlikely to impact OPEC+'s likely decision to delay the 2 mln bpd production increase scheduled for January's by another three months.GOLD STABILIZES ABOVE $1,800/OZ AFTER US DATA DISAPPOINTSGold largely traded around the $1,810/oz mark yesterday within a $1,800-1,817/oz range, with investors gauging an array of US economic data. Jobless claims posted a second consecutive weekly increase, and despite an increase in household spending in October, incomes and savings fell during the month. This effectively contradicted the very upbeat November services and manufacturing PMIs released on Monday (which sent gold into freefall on expectations of smaller future stimulus) and indicates that the economic rebound is becoming more precarious amid the rise in coronavirus cases. The weak labor market is very likely to drive the entire economy down, boosting the case for further stimulus and acting as a spur for gold. Should the US economy in fact receive a further monetary and fiscal boost late this year and early next year, gold bulls will start to brace for positive labor market data, as it would further boost inflationary fears amid the vast inflow of liquidity. The minutes to the November 4-5 FOMC meeting were slightly supportive, as members kept their options open on future changes to its asset purchase program.We expect no major market moves today due to the US public holiday. The minutes from the ECB's October meeting will be In focus and should shed light on the prospects for new stimulus and an expected increase in the QE program in December to support the economy during the second wave of the virus. This could provide a slight boost to gold today. Bullion continues to trade above its 200d MA support level, which currently stands at $1,799/oz. We expect that gold is likely to experience a brief consolidation period (following its slump earlier this week) before targeting the $1,827/oz resistance mark.