Commodities Daily - October 13, 2021

> Oil prices stabilize ahead of EIA and OPEC monthly reports. This morning Brent is trading near $83.5/bbl with the focus on the EIA and OPEC monthly oil reports for more analysis on how much the power crisis is likely to boost fuel demand over winter and for guidance on how far oil inventories could draw in the coming months. In our view, today's fundamental data, also including the API US weekly inventory report due overnight, should support Brent toward a weekly high of $84.60/bbl.> Gold gained amid positive for bullion macro data. Gold rose from $1,755/oz to $1,760/oz yesterday, while the 10y UST yield slid from 1.61% to 1.57%. Gold is trading near $1,760/oz as we write. Today, the market awaits US CPI data for September, FOMC minutes and eurozone industrial production for August. We expect bullion to retest support at $1,745/oz today.> Base metals mixed, Chinese trade data in focus. Base metals were mixed yesterday. Investors remained concerned about inflationary pressures and also seemed worried about the start of the 3Q21 earnings season, which might provide some insight on inflation as well as the global economic slowdown.OIL PRICES STABILIZE AHEAD OF EIA AND OPEC MONTHLY REPORTSYesterday, Brent traded sideways within an $82.70-84.20/bbl range as investors assessed how the global energy shortage will affect oil demand this winter, while the IMF expressed concern that the global economic recovery has lost momentum amid rising costs for food and fuel. Meanwhile, Bloomberg, citing officials with knowledge of the matter, reported yesterday that a top European official is expected to fly to Tehran as soon as this week to seek an agreement to restart nuclear talks between Iran and world powers after months of delays. Recall that negotiations had stalled after Ebrahim Raisi, viewed as a conservative in the Iranian political system, was elected president. Should the US rejoin and Iran comply with the 2015 agreement, a wave of oil could be unleashed into the market amid the tightening global supply. Yesterday, front-month Brent eventually settled at $83.42/bbl, fixing $0.23/bbl below the previous settlement.This morning, Brent is trading near $83.50/bbl as investors analyze the IEA's annual World Energy Outlook, which offered the conclusion that the development of clean energy is still far too slow to put global emissions onto a sustained decline toward net zero. The IEA also highlighted that the current surge in fossil fuel prices is not a result of climate policies. It noted that higher costs for oil and gas might make low-carbon energy more competitive or encourage a faster shift to alternative sources of energy, but things could just as easily swing in the opposite direction - pressure might be put on governments to raise fossil fuel subsidies, reduce clean energy levies and/or dilute planned support for low‐carbon technologies. For the first time, every scenario presented by the IEA showed consumption leveling off sometime between 2025 and the mid-2030s, depending on which climate pledges are eventually implemented.The focus today is the EIA and OPEC monthly oil reports for more analysis on how much the power crisis is likely to boost fuel demand over winter and for guidance on how far oil inventories could draw in the coming months. Note that TotalEnergies CEO recently highlighted that demand for fuel oil is rising in parts of Asia as soaring natural gas prices prompt switching to one of the most polluting fuels, which could have an impact on the oil market. In our view, today's fundamental data, also including the API US weekly inventory report due overnight, should support Brent toward a weekly high of $84.60/ LD GAINED AMID POSITIVE FOR BULLION MACRO DATAGold rose from $1,755/oz to $1,760/oz yesterday, while the US 10y Treasury yield slid from 1.61% to 1.57%. EUR/USD decreased from 1.155 to 1.153, creating headwinds for bullion. The macro data mostly supported gold yesterday. The US NFIB small business optimism index for September printed 99.1 points, slightly below the 99.5 expected. Moreover, the JOLTS data for August surprised investors with 10.439 mln open vacancies (consensus was near 11 mln). That indicated that the Delta strain also affected companies' ability to find new workers. This supported gold, as is the case with any weak US data. However, weak data in the EU has the opposite effect: for example, the eurozone ZEW economic sentiment survey for October printed 21 points, after 31.1 points in September. This created headwinds for gold. Additionally, the first commentaries from Fed officials after the weakest nonfarm payrolls so far this year were slightly hawkish. Atlanta President Raphael Bostic said that higher inflation in the US is lasting longer than the Fed expected and that it is not correct to refer to such price increase as "transitory," calling it "a dirty word." Vice Chairman Richard Clarida indicated that the current conditions are appropriate to begin tapering the bond-buying program. These comments dampened sentiment for gold late in the day.During Asian trading today gold remains near $1,760/oz. Today, the market awaits US CPI data for September, FOMC minutes and eurozone industrial production for August. The consensus for inflation today is 0.3% growth, but given the price surge in energy and other industrial commodities, the print could come in above that. Also, the FOMC minutes from the last meeting may reveal that the majority of policymakers expect to start tapering QE in November. This (as well as other possible signals) would be bearish for gold. We expect bullion to retest support at $1,745/oz SE METALS MIXED, CHINESE TRADE DATA IN FOCUSYesterday, base metals closed mixed. Three-month LME contracts on copper fell 0.81% (-$77/tonne from the previous close) to settle at $9,451/tonne, aluminum rose 0.56% (+$17/tonne) to $3,066/tonne, nickel dropped 1.10% (-$210/tonne) to $18,958/tonne and zinc gained 0.78% (+$35/tonne) to settle at $3,247/tonne.Copper came under pressure yesterday as investors weighed the impact of the ongoing inflationary pressures against the prospects of further economic growth. Volatility in the copper market was elevated with the earnings season just around the corner. Traders expect companies' quarterly financial updates to contain clues on where things stand with some of the ongoing supply issues that have been fueling inflation. The copper market's recent return to a bullish pattern of backwardation and the solid fundamentals (the market is tight) have been keeping prices above $9,000/tonne, but copper, a bellwether for the global economy, is likely to continue pricing in a deteriorating global economic outlook and move in a downward corridor through the remainder of the year.Today's Chinese trade data has been one of the key drivers in metals markets this morning. China's exports in September beat expectations, with the pace of growth picking up to 28.1% y-o-y from 25.6% in August. Import growth, however, was below expectations at just 17.6% y-o-y in September, down from 33.1% in August. While exports have proven resilient amid the ongoing power rationing, more recent developments in China, such as the flooding in northern regions, have further limited the supply of coal in the country, which might be reflected in the trade data for October. In the meantime, today's trade data could provide some temporary support to the metals market, prolonging the rally that started last