Commodities. Oil and Gold Daily - September 13, 2017

> Oil gains on OPEC report. After trading near $53.7/bbl early in the day, the Brent November contract jumped almost $0.6/bbl to settle at $54.27/bbl, up $0.43/bbl on the day. The increase was prompted by the release of the monthly OPEC report, which, as we expected, did not rattle the market but kept Brent trading around the $54/bbl mark on improved sentiment. Total OPEC crude output, including from member countries not party to the deal, eased 0.08 mln bpd in August to 32.75 mln bpd. The decline was driven by disruptions in Libya, though these were offset by growth of 0.14 mln bpd in Nigeria. Improved compliance from Gabon, Iraq, Saudi Arabia, UAE and Venezuela ultimately proved crucial, fixing output by the members obliged to cut at 30 mln bpd in August, down 0.1 mln bpd m-o-m. We think the positive impact of the OPEC report will prove to be short-lived as the EIA US inventory data takes center stage later today. We expect the EIA report to echo the positives from this morning's monthly report from the IEA, which raised its global demand estimate, forecast that OECD refined product stocks will fall to the five-year average by end 2017 and estimated that OPEC production dropped in August.
> But large crude inventory gain is set to put pressure on prices. Brent has so far offered a muted response to yesterday's rather bearish API data, which showed a 6.2 mln bbl gain in US crude stocks in the week to September 8, to 468.8 mln bbl. However, we expect pressure on prices to build during the day, with the EIA inventory report due at 17:30 Moscow time likely to deliver a blow and sending the front-month contract closer to $53/bbl. The report will cover the impact of refinery closures following Hurricane Harvey, and a rise in oil stocks is therefore a given. We stick to our view that the oil price could move if the buildup exceeds expectations (the current Bloomberg consensus is for a 4.9 mln bbl increase).We think an increase above that level and even above the API's estimate is likely, so we expect oil to come under pressure following the EIA data. The substantial draw in refined product stocks as reported by API will provide some support to prices, but how quickly US refineries normalize their operations and to what extent the US increases crude oil exports to push excess volumes out of the country will be key for the oil market in September.
> Gold prices hold firm as Pyongyang is driven into a corner. Gold prices ticked above $1,330/oz late in the day yesterday despite gains in US Treasury yields and the strengthening dollar, a move that contradicts the historical inverse correlation and implies that the uncertainty factor was supporting safe haven gold. We think this factor was Donald Trump's criticism of the new UN sanctions as "nothing." Meanwhile, the US treasury secretary warned China (North Korea's main trading partner) that if Beijing does not comply with the sanctions, its access to the US financial system will be restricted. With North Korea now being driven into a corner, we now see a greater risk that Pyongyang will emerge with a strong reaction. This risk and the geopolitical stalemate should keep safe-haven assets elevated for the rest of the week, with gold holding above the key $1,300/oz support level but exposed to profit taking during bouts of dollar strength; indeed, the latter could surge on PPI data today and CPI data tomorrow (for more details see today's Russia FX Beat).