Commodities. Oil and Gold Daily - September 20, 2017

> Oil gains limited amid increasing likelihood of OPEC cuts extension. Brent for November delivery peaked at $55.88/bbl midday yesterday before it started to slide. After touching an intraday low of $54.89/bbl later, it recovered to settle at $55.14/bbl, down $0.34/bbl on the day. Oil prices have shown very similar intraday behavior in the last two sessions, dipping midday and then paring some of those losses later. This suggests that market players are not taking recent verbal interventions from OPEC officials in support of extending the deal at face value. Yesterday, at a conference in the UAE, Iraq's oil minister confirmed that OPEC+ countries are considering an extension, which had been rumored in the market for some time. The market's reaction was nevertheless subdued, although this is not surprising: given the amount of verbal interventions from OPEC officials this year, there is a strong perception that, most of the time, they are just trying to talk up prices - a boy-who-cried-wolf effect. Still, we think the market would react to any positives coming from the OPEC+ ministers meeting in Vienna on Friday.
> API data suggests that crude builds are nearly over. Brent has so far reacted little to yesterday's rather bullish API data, having gained only $0.2/bbl after the release. It showed that US crude stocks had risen 1.4 mln bbl to 470.3 mln bbl in the week to September 15, below the Bloomberg median estimate of a 3.9 mln bbl increase. In our view, this was the only bearish part of the report. It also showed a w-o-w increase of almost 0.28 mln bpd in refinery crude runs, a very large draw of 5.1 mln bbl in gasoline stocks and a major draw of 6.1 mln bbl in distillate stocks. The EIA's inventory report will be released today at 17:30 Moscow time and is likely to show that US refineries are rather quickly returning operations to normal levels following Hurricane Harvey. This, combined with the substantial draw in refined product stocks reported by the API, may provide some support to prices. In the bigger picture, amid recent sharp draws in refined product stocks and increased end-user demand as a result of the hurricanes, more US refineries are planning to postpone their seasonal maintenance in autumn to target high margins. Postponed maintenance may lead to crude inventory draws in October, supporting oil prices. Like last week, today's EIA data is likely to be noisy (especially the import and export figures); nevertheless, it is likely to leave a strong bullish impression and lead to expectations that could drive Brent closer to $56/bbl by the end of the day.
> Dip in DXY supports gold prior to Fed decision. Gold prices were range-bound yesterday, trading around $1,308/oz for most of the day. Some support came from Donald Trump's speech at the UN when he said that the US could "totally destroy" North Korea. This morning, a dip in the DXY Index has supported gold, which is trading close to $1,315/oz. This is ahead of the Fed's announcement of its rates decision today at 21:00 Moscow time. As we mentioned yesterday, the Fed is likely to keep to its forecast of one hike before year end but reduce its forecast from three to two hikes for 2018. The risk of a much more dovish Fed remains, which would weigh heavily on the dollar and could lead to a rebound in gold prices, as has already happened on a number of occasions this year.