Commodities. Oil and Gold Daily - October 12, 2017

> Oil prices unshaken by OPEC and EIA reports; US inventory data eyed. After reaching an intraday high of $57/bbl midday yesterday, the front-month December Brent contract started to slide toward $56.2/bbl. However, it staged a sharp recovery later and settled at $56.94/bbl, up $0.33/bbl on the day. The monthly OPEC report was released at 14:00 Moscow time and was not warmly welcomed by the market, as it sparked the midday price descent to $56.2/bbl. We do not think the report was bearish, as OPEC expressed optimism over the success of market rebalancing induced by the OPEC+ production cut deal and strong demand, as reflected in surplus OECD crude and refined product inventory levels easing to 171 mln bbl in August, down 24 mln bbl m-o-m and down from 322 mln bbl in January. We think investors' muted reaction to the 170 mln bbl August figure was due to fact that it had previously been reported by the JMMC committee at end September. The OPEC report also noted 98% compliance in September among those members obliged to cut production. The key bearish highlight was OPEC's price "assumption" for next year: it expects Brent to trade within the $50-55/bbl range, below the current $55-60/bbl range, under pressure from rising US shale production. Later in the day, the EIA in its monthly report lowered its 2017 US production estimate by 0.01 mln bpd to 9.24 mln bpd but lifted its 2018 projection by 0.08 mln bpd to 9.92 mln bpd. Both OPEC and the EIA slightly increased their demand growth forecasts for next year, with OPEC now eyeing an increase of 1.38 mln bpd y-o-y in global terms and the EIA seeing US demand rising 0.42 mln bpd y-o-y.
Post-settlement, Brent lost almost $0.3/bbl following the API release, which showed that US crude stocks rose 3.1 mln bbl to 468.5 mln bbl in the week to October 6, versus the Bloomberg consensus forecast of a 2.4 mln bbl decrease. Refined products data was mixed, with gasoline inventories down 1.6 mln bbl w-o-w and distillates up 2 mln bpd w-o-w (both diverging from the Bloomberg consensus). The key bearish development was a weekly surge in oil imports by 0.65 mln bpd to 8.1 mln bpd, and if this is confirmed in the EIA data today at 18:00 Moscow time, causing a surge in inventories, this will likely pressure front month Brent closer to $56/bbl later today.
> Gold continues to benefit from weaker DXY and Treasuries. Gold held firm around the $1,290/oz mark for most of yesterday's session and found strong support later after the release of the September Fed minutes, which showed a sharp debate among FOMC members over inflation, which continues to lag, leaving the Fed and investors uncertain over the pace of proposed rate hikes. This uncertainty among official ranks (despite the Fed's rather hawkish forecast for a 25 bp hike by year end and three hikes projected for 2018) exerted pressure on Treasury yields and the dollar, forcing the gold price higher to just below the key $1,300/oz resistance level. Today, investors will be eying US September PPI at 15:30 Moscow time and comments from Fed officials at 17:30. Spanish PM Rajoy has given Catalan officials until Monday to clarify their position over independence, so the euro is unlikely to come under pressure until then. We expect gold to eventually break above the $1,300/oz resistance level today, fixing at the lower end of the $1,300-1,305/oz range.