Commodities Daily - September 10, 2020

> Oil prices stabilize ahead of EIA inventory report. Today, in the run-up to the EIA inventory report, investors will be digesting the ECB's interest rate decision and policy statement, along with August PPI data and weekly jobless claims from the US. The ECB is widely expected to keep its main policy rates unchanged, but it could offer more dovish forward guidance than expected, which, along with likely upbeat US economic data, could boost the dollar, putting pressure on oil prices. In light of last night's API stockpile data and given that US Gulf Coast crude producers returned to operations quicker than refiners after Hurricane Laura, we expect a crude stock build of around 4 mln bbl in today's EIA inventory report. How oil prices would react to this would depend largely on how bullish the refined product data turns out to be. Given the above, we think the risks for oil prices are skewed to the downside and see Brent as likely to break below $40.1/bbl technical support, opening up the path to the next support level of $39.4/bbl. If, however, the EIA report were to provide an upbeat surprise, Brent could head for a test of resistance at $41.2/bbl.> Gold stands at around $1,940/oz ahead of several key events. In the diary today are an ECB meeting, a vote on the US fiscal support package, more Brexit talks, and US jobless claims and PPI. Gold surged yesterday following a Bloomberg report citing ECB sources expressing confidence that the prospects for a recovery in the eurozone are brightening. The report put significant pressure on the dollar, boosting gold, which ended the day 0.8% higher at $1,947/oz. We anticipate restrained rhetoric from CBR President Christine Lagarde today (20:00 Moscow time) and strong US data, which are likely to pressure gold into testing technical support at $1,907/oz.OIL PRICES STABILIZE AHEAD OF EIA INVENTORY REPORTAfter sliding to as low as $39.3/bbl on Tuesday, front-month Brent continued to hover below $40/bbl in the first half of the day yesterday before rising toward $41/bbl later on. The multi-day oil price correction came to a halt yesterday in part because global stocks staged a sharp recovery, with the recently beaten-down tech sector leading the gains. However, it should be noted that substantial catalysts were lacking and the gains have been widely attributed to market participants buying the dip. Later in the day, oil investors turned their attention to the EIA's monthly report, which was downbeat. It contained a new forecast that US crude production will fall by only 0.87 mln bpd this year, while last month the EIA predicted a 0.99 mln bpd drop. This helped push the agency to raise its 2020 non-OPEC supply estimate by 0.23 mln bpd - it now expects a decrease of 2.2 mln bpd y-o-y, versus last month's forecast of a 2.38 mln bpd decline. Also on the bearish side, it downgraded its 2020 global demand forecast by 0.07 mln bpd and now expects an 8.33 mln bpd y-o-y drop to 93.07 mln bpd. Brent eventually settled at $40.79/bbl, fixing $1.01/bbl above the previous settlement.Overnight, the API reported that US crude stocks rose 3 mln bbl to 504.1 mln bbl last week (versus the EIA's latest figure of 498.4 mln bbl). The buildup came amid a 0.59 mln bpd increase in imports and a 0.89 mln bpd drop in refinery runs. Crude stocks at Cushing were up by 2.6 mln bbl. The refined product data, meanwhile, was mixed, showing a strong 6.9 mln bbl draw in gasoline stocks but a 2.3 mln bbl increase in distillate inventories. Investors are now positioning themselves for the EIA inventory report today at 17:30 Moscow time. The Bloomberg consensus is calling for a 3 mln bbl crude stock draw, a 2.8 mln bbl decrease in gasoline inventories and a 1 mln bbl decline in distillate stocks.Today, in the run-up to the EIA inventory report, investors will be digesting the ECB's interest rate decision and policy statement, along with August PPI data and weekly jobless claims from the US. The ECB is widely expected to keep its main policy rates unchanged, but it could offer more dovish forward guidance than expected, which, along with likely upbeat US economic data, could boost the dollar, putting pressure on oil prices. In light of last night's API stockpile data and given that US Gulf Coast crude producers returned to operations quicker than refiners after Hurricane Laura, we expect a crude stock build of around 4 mln bbl in today's EIA inventory report. How oil prices would react to this would depend largely on how bullish the refined product data turns out to be. Given the above, we think the risks for oil prices are skewed to the downside and see Brent as likely to break below $40.1/bbl technical support, opening up the path to the next support level of $39.4/bbl. If, however, the EIA report were to provide an upbeat surprise, Brent could head for a test of resistance at $41.2/ LD STANDS AT AROUND $1,940/OZ AHEAD OF SEVERAL KEY EVENTSGold advanced 0.8% yesterday to $1,947/oz amid abrupt dollar weakening. Bloomberg reported that the ECB is likely to release barely changed GDP and inflation forecasts from June following its meeting today. One source told Bloomberg that the GDP projection for this year will be raised in light of much better than expected consumer spending. The report caused the euro to surge against the dollar and lifted gold.Bullion is trading around the $1,940/oz level as we write. In the diary today are the ECB meeting, a vote on the US fiscal support package, more Brexit talks, and US jobless claims and PPI. We anticipate restrained rhetoric from CBR President Christine Lagarde today (20:00 Moscow time) and strong US data, which are likely to pressure gold into testing technical support at $1,907/