Commodities Daily - November 8, 2021

> Oil on the rise following last week's OPEC+ meeting. Apart from weighing the odds of a release of crude from the US Strategic Petroleum Reserve, today investors will be digesting China's trade data released this morning showing crude imports having fallen in October to their lowest levels in more than three years. Despite this, we think Brent has the potential to rally toward $84.5/bbl later today. > Gold reaches new recent highs after Fed meeting. Gold rose from $1,770/oz to $1,815/oz over Thursday and Friday, while the US 10y Treasury yield fell from 1.55% to 1.45%. Gold is trading near $1,820/oz as we write. There is not much on today's macro agenda. We expect bullion to trade in the $1,805-1,830/oz range.> Base metals mostly trade higher as investors assess Fed rhetoric. Copper has been supported by tight fundamentals, while aluminum is under pressure from reports that Russia is set to boost exports.OIL ON THE RISE FOLLOWING LAST WEEK'S OPEC+ MEETINGOn Friday, Brent rallied $2.9/bbl, briefly breaking above $83/bbl and eventually settling at $82.74/bbl, fixing $2.2/bbl above the previous settlement. This came after Saudi Arabia raised the official selling price of its crudes to buyers around the globe. This, in turn, came on the heels of Thursday's OPEC+ meeting, at which the group refused to cave to pressure to pump more than the scheduled 0.4 mln bpd increase in December. It was not only the US but also other major consumers including China, India and Japan that were lobbying to speed up supply additions. However, the Saudi energy minister led a carefully crafted press conference that provided a comprehensive rebuttal of these demands and criticisms of OPEC+ policy. Expectations of stock builds in 1Q22 and potential concerns about near-term demand were among the reasons cited. Multiple OPEC+ delegates, particularly those from Russia and the UAE, lined up to state that it was a unanimous decision to stick to the output schedule and emphasized that OPEC+ was acting responsibly to achieve stability in oil markets, in contrast to the sharp increases seen in gas and coal prices - the markets for which have no regulating mechanism - this year.Following the OPEC+ decision, which the US has criticized, the White House must decide whether it is willing to release oil from the Strategic Petroleum Reserve. US law permits only the release of up to 30 mln bbl in one go in the event of "a domestic or international energy supply shortage of significant scope or duration." Given there is no specific supply disruption driving the current oil price rally and also given the IEA's focus on energy transition and moving countries away from fossil fuels, the agency is unlikely to recommend a coordinated release to its member countries, even though some countries are already acting (such as Japan and South Korea). The US could be looking to non-IEA members to participate in any release, although China and India have already been making releases from their strategic reserves over the past few months.It is possible the US will announce an SPR release but not follow through. Global commercial crude stocks at end-October were 35 mln bbl below the October 2019 levels, and if the US does not announce an SPR release in the next few days, which remains a distinct possibility, the market should move higher. This morning, Brent has rallied all the way to $84/bbl, before easing slightly, which suggests that traders are doubtful that Biden will authorize a release from the SPR after last week's OPEC+ meeting. Apart from weighing the odds of such a release, today investors will be digesting China's trade data released this morning showing that in October crude imports fell to their lowest levels in more than three years. Despite this, we think Brent has the potential to rally toward $84.5/bbl later today. As for this week, oil investors are eyeing the monthly EIA report, US weekly inventory and October inflation data. LD REACHES NEW RECENT HIGHS AFTER FED MEETINGGold rose from $1,770/oz to $1,815/oz over Thursday and Friday, while the 10y US Treasury yield slid from 1.55% to 1.45% and EUR/USD dropped from 1.161 to 1.157. The main driver for gold prices late last week was the outcome of the FOMC meeting, including Fed Chairman Jerome Powell's press conference. The statement did not contain any surprises, and it confirmed that the Fed would begin tapering its $120 bln per month bond-buying program with a moderate $15 bln reduction in November. Powell indicated that the planned pace of tapering has the Fed on track to wrap up the program in mid-2022, but the pace may be sped up or slowed down depending on the health of the US economy. However, the Fed remained moderately dovish overall, with Powell saying, "Like most forecasters we continue to believe that our dynamic economy will adjust to the supply and demand imbalances." And even though inflation has been running high for considerably longer than expected, the chairman said that the start to QE tapering does not suggest that the first rate hike will come anytime soon. Gold found support from the Fed's moderately dovish stance amid persistently high inflation. However, Friday's jobs report was not as supportive for bullion. Nonfarm payrolls beat expectations with 531k new jobs added in October, while the consensus was 450k. This marked a considerable improvement in the labor market following two months of disappointing data, suggesting that the worries over the pandemic are fading. During the Asian trading session today, gold has advanced to slightly below $1,820/oz. There are not any noteworthy releases on today's macro calendar. Later in the week, the US will publish October CPI and PPI data (on Tuesday and Wednesday), along with the NFIB small business optimism index for October, the University of Michigan consumer sentiment index for November, the JOLTS report for September and weekly initial jobless claims. Thursday is Veterans Day in the US. Meanwhile, the ECB's latest Economic Bulletin, November ZEW survey data and September industrial production data are due from the eurozone this week. We expect bullion to be range-bound at $1,805-1,830/oz SE METALS MOSTLY TRADE HIGHER AS INVESTORS ASSESS FED RHETORICBase metals mostly traded higher on Friday, with zinc an exception. Copper gained 0.84%, aluminum 0.08% and nickel 1.53%, while zinc fell 0.37%.Base metals were recovering from their declines on Thursday as investors weighed the Fed's rhetoric. While prices were up significantly in the early hours of trading on Thursday following the Fed's relatively dovish comments, metals lost their gains as the day went on. Although the US regulator said it would start to trim its bond purchases this month, its comments suggesting that it would not hike rates anytime soon and that it would take a wait-and-see approach, closely monitoring labor market data, proved supportive for commodity prices.For copper, fundamentals have been another supportive factor, as there are growing concerns over the supply side. With inventories on the LME and in Shanghai remaining at multi-year lows, the recently published weak September output data from Latin America is likely to raise the floor for copper prices in the months to come.Meanwhile, aluminum has been testing new recent lows. Futures on the LME slid to around $2,500/tonne on Thursday following a selloff of inventories on expectations that Russia would remove taxes on aluminum exports, which would significantly add to global supply. A further decline in prices may follow if and when the duties are actually