Commodities. Oil and Gold Daily - October 11, 2017

> Oil prices inch higher; OPEC and EIA reports eyed. After hovering just below $56/bbl early yesterday, the Brent December contract started to gain strength amid news that Saudi Arabia will not meet a waterborne demand for its crude in November. The latter is estimated at 7.71 mln bpd, and Saudi Arabia is planning to ship only 7.15 mln bpd, according to figures from the Oil Ministry provided on Monday after the country raised the November premiums for its Arab Light over international benchmarks to their highest level in 16 months. Yesterday, many Asian refiners began to confirm that Saudi Araba is in fact trimming supplies for November - a month when Asian refiners are expected to boost inputs by 0.4 mln bpd m-o-m to 28.6 mln bpd - which is providing fundamental support for prices. The front month contract eventually settled at $56.61/bbl, up $0.82/bbl on the day.
Today sees the release of the monthly OPEC report at around 13:00-14:00 Moscow time. We do not expect the release to rattle the market; in fact, we think it will improve sentiment and provide support for Brent to trade at $57/bbl later in the day. We expect that total OPEC output, including from countries not obliged to cut, increased slightly in September, largely driven by a rise in Libyan output, which remains 0.1 mln bpd below its YTD high and thus has the potential to grow further should pipeline disruptions ease. We see compliance with the production cut deal easing slightly in September but staying strong at around 85%. Positives are also expected to come from a decline in OECD inventories, taking them back toward the five-year average, and global oil demand growth projections for next year remaining at last month's elevated level of 1.35 mln bpd.
At 19:00 Moscow time, investors will switch attention to the EIA's short-term energy outlook. The agency might continue to slightly trim its US oil production forecast figures for both 2017 and 2018, which stood at a respective 9.25 mln bpd and 9.84 mln bpd a month ago. Both of those figures were revised lower a month ago to account for the negative effects of Hurricane Harvey. This time, a downward revision could come from the recent disruption caused by Hurricane Nate had in the Gulf of Mexico. We think this would provide enough support for Brent to settle very close to $57/bbl today.
> Gold remains strong amid geopolitical uncertainties; Fed minutes eyed. Gold prices remained elevated yesterday, starting the day at just below $1,285/oz and climbing to an intraday high of $1,294/oz at midday on dollar weakness and a decline in US Treasury yields. This morning, gold is trading around $1,290/oz, defying our forecast that prices would ease in light of North Korea failing to mark a large public holiday with another missile test and expected euro weakness driven by the Catalan independence uncertainty. This uncertainty remains, as Catalan President Carles Puigdemont appeared to declare independence, only to swiftly state that dialog and reduced tension with Madrid are required. The lack of an explicit independence declaration supported the euro but still forced investors to seek safe havens, as Spain weighted down by the constitutional crisis. Today, the market players will eye the release of the Fed minutes from its September meeting at 21:00 Moscow time. We do not expect these to rattle the market and see gold staying in the current $1,285-1,290/oz range.