Commodities Daily - November 9, 2020

> Oil prices surge as Biden clinches election; top OPEC+ officials to speak at conference today. Brent has surged this morning along with other risk assets after Joe Biden clinched the US presidency over the weekend, even as Donald Trump rejected the outcome. Today, oil investors will eye the first day of the ADIPEC 2020 Virtual Strategic Conference. Speakers include the energy ministers of Saudi Arabia, Russia and the UAE and OPEC's secretary general. In our view, the continuing global market risk-on following Biden's victory amid a likely hint by top OPEC+ officials that planned production increases next year will be delayed could take Brent beyond the $40.7/bbl resistance level later today (which it is struggling to overcome this morning), leading to a consolidation within the $41.1-41.5/bbl range. > Gold prices hold high ground as Biden victory keeps pressuring dollar. No major economic releases are scheduled today. Rather, the focus will be on speakers: ECB President Christine Lagarde, the BoE's governor and chief economist, and a number of ECB board members and regional Fed presidents are scheduled to deliver remarks. In our view, gold is now targeting the $1,975/oz technical resistance level, after clearing resistance at $1,951/oz.OIL PRICES SURGE AS BIDEN CLINCHES ELECTION; TOP OPEC+ OFFICIALS TO SPEAK AT CONFERENCE TODAYOn Friday, front-month Brent slid below the $40/bbl mark and eventually settled at $39.45/bbl, fixing $1.48/bbl below the previous settlement amid rising global coronavirus cases and as drawn-out vote counting in the US presidential election kept markets on edge. An upbeat US October jobs report (unemployment was down sharply amid signs that the economy is healing from the pandemic-induced downturn) was countered by another weekly increase in the Baker Hughes US active oil rig count. This morning, Brent prices surged along with other risk assets after Joe Biden clinched the US presidency over the weekend, even as Donald Trump rejected the outcome and his campaign team mounted lawsuits in key states alleging election fraud. One of the main points of concern now is the unresolved question of Senate control, a circumstance that entails slim prospects for a major fiscal stimulus package before January. Although Republicans appear to have retained control of the Senate, the final makeup may not be clear until a January runoff in Georgia, where neither candidate garnered the required 50%. If the Democrats can gain both seats in Georgia, a traditionally Republican state, this would lead to a 50-50 tie in the Senate. This implies that Democrats might have an incentive to wait until the Georgia runoff. Retaking control of the upper chamber would allow the Democrats to push ahead with their vast $2 trln fiscal stimulus plan and also to hike the corporate income tax. A divided Congress would likely prevent Biden from enacting certain types of legislation such as fighting climate change or easing sanctions on oil producer Iran.Meanwhile, Chinese customs data released on Saturday showed October crude oil imports at 10 mln bpd, which is much lower than the 11.8 mln bpd imported in September and 10.72 mln bpd last October. This is providing some headwinds to oil prices this morning. In our view, however, this low print will most likely prove to be a one-off and China's oil imports should rise going into next year after Beijing last week increased its non-state crude oil import quota for 2021 by 20%. Today, oil investors will eye the first day of the ADIPEC 2020 Virtual Strategic Conference. Speakers include the energy ministers of Saudi Arabia, Russia and the UAE and OPEC's secretary general. In our view, the continuing global market risk-on following Biden's victory amid a likely hint by top OPEC+ officials that planned production increases next year will be delayed could take Brent beyond the $40.7/bbl resistance level later today (which it is struggling to overcome this morning), leading to a consolidation within the $41.1-41.5/bbl range. This week, apart from the ADIPEC conference, oil investors will eye EIA, OPEC and IEA monthly oil market reports, which we think will be largely downbeat amid the latest European lockdowns. Also note that the US federal government holiday on Wednesday pushes back both the weekly EIA inventory data and CFTC positioning report.GOLD PRICES HOLD HIGH GROUND AS BIDEN VICTORY KEEPS PRESSURING DOLLARMidday on Friday, the gold price surged $20/oz to $1,960/oz and later in the day began to consolidate around the $1,950/oz mark amid further dollar weakening. The likely outcome of the US election - a Joe Biden presidency with Republicans maintaining control of the Senate - continued to drive markets on expectations of a combination of some fiscal stimulus (though probably less than under some other scenarios) and less risk to the earnings of multinationals and US corporates than under a Democratic Senate. Over the weekend, major news agencies announced that Biden had secured enough votes in additional US swing states to ensure his victory. Democrats, some Republicans and many world leaders acknowledged the result. However, gold remains within the $1,950-1,960/oz range as a Biden victory was already priced in last week when gold took off from the $1,900/oz mark. Some headwinds also come from the Trump campaign continuing to press legal options to demand recounts and reviews in various states. Hence, in the most technical of senses, the process to resolve the election continues despite the outcome of a Biden victory now being highly likely. As we noted in detail in the oil section above, the focus now moves to which party will secure control of the Senate.No major economic releases are scheduled today. Rather, the focus will be on speakers: ECB President Christine Lagarde, the BoE's governor and chief economist, and a number of ECB board members and regional Fed presidents are scheduled to deliver remarks. As for macro releases, German trade balance and eurozone investor confidence are scheduled. Biden is expected to announce a team to determine details of pandemic policy prior to his January inauguration as president. Brexit talks will continue through the week. Court cases and rhetoric surrounding the US presidential election will continue to generate headlines, while US stimulus negotiations and the spread of Covid-19 will likely generate market-relevant stories as well. Among potential focus points for gold investors later in the week is Thursday's ECB Forum featuring the heads of the ECB, Fed and BoE and a G20 financiers' meeting on Friday. In our view, gold is now targeting the $1,975/oz technical resistance level, after clearing resistance at $1,951/oz.