By Barani Krishnan
Investing.com – The powers that be within OPEC must find it hard to believe their luck is that oil prices may actually rise at a time when cases of Covid-19 are unleashed across the United States .
Yet if the vaccine news is to be believed – and it has to be if we are to hope for any semblance of normal life in the near future – then the Saudi-led cartel, along with its Russian-led allies , should believe the day. maybe not very far when we can all jump on a plane or a cruise ship without a second thought.
While the market was ready to let hope live, the Trump administration seemed determined to destroy all the goodwill it had built up over the past four years.
Treasury Secretary Steve Mnuchin attempted to steal early Christmas by attempting to recover nearly half a trillion dollars from the Federal Reserve, which the central bank carefully managed to support Main Street markets and lending programs during the pandemic.
Mnuchin referred to what he believed was Congress’ original intention when it allocated the funding, and his belief that the markets no longer needed the money – which could be redeployed as a direct stimulus. instead for the people. He managed to say this with a straight face, and after criticizing Fed officials who insisted their support programs were not over.
The gold market, run by both humans and androids programmed to buy at any positive mention of stimulus, jumped at Mnuchin’s remarks.
Outside of commodities, in equity trading circles in particular, the lack of sincerity and the policy of making the Biden administration’s transition even more difficult have not been missed.
The two ended the week lower as markets saw not only Trump but his cabinet doubling down on its refusal to recognize Biden’s election victory on November 3 and work with the president-elect’s designated picks.
“Some parts of the country are on the verge of experiencing the worst (of) Covid-19 and it just seems time to cut support programs,” said Ed Moya, analyst at OANDA in New York.
“The current Covid surge will trigger further economic suffering for the U.S. economy and possible strain on the financial system, making Mnuchin’s demand a Grinch-like move that only adds more uncertainty to the short-term outlook.
And while oil has rebounded for a third week in a row, there is potential for those gains to worsen as real-time coronavirus infections and deaths continue to overtake vaccine development at a frightening rate – no thanks to the Trump administration’s stance since the election to focus only on the pandemic when credit is due.
In the case of gold as well, its so-called safe haven quality is only intact as long as there is no widespread asset liquidation as seen in the first quarter. Prices of the yellow metal fell in the first two weeks of March, along with stocks, just after the start of the US Covid-19 lockdowns.
Crude prices rose for a third week in a row as investors weighed positive news from the Covid-19 vaccine against the prospect of further lockdowns on demand.
The exchange in New York, the leading indicator for U.S. crude, last traded at $ 42.44, after officially settling Friday’s session at $ 42.15, up 41 cents, or 1%, over the day. For the week, WTI was up $ 2.02 or 5%.
London, the global benchmark for oil, last traded at $ 45.11, after officially ending Friday’s session at $ 44.96, up 62 cents or 1.4%. For the week, Brent was up $ 2.18, or 5.1%.
The number of operations in the United States increased by 231, the first decline in ten weeks, from 236 last week, according to data from energy services firm Baker Hughes.
The decline in the number of oil rigs, which often serves as a proxy for future production and demand, comes as oil and gas producers seek to stabilize production after a second quarter pandemic shutdown , when oil prices briefly turned negative.
However, signs of declining activity have been ignored, with investors betting that sooner rather than later deployment of a vaccine will speed up the reopening of the global economy, sparking a surge in demand from hard-hit sectors affected such as air transport.
The ongoing winning streak comes just days after the Energy Information Administration said U.S. crude inventories rose less than expected last week, despite gasoline supplies surging.
Barrel inventories rose 800.00 barrels for the week ended November 13, compared to expectations of a 1.65 million barrels rise. Inventories of – one of the products in which crude is refined – rose 2.6 million barrels, blurring expectations of production of around 0.1 million barrels.
Weak fuel demand has been attributed to further lockdowns in the United States amid the surge in Covid-19 cases. Still, some expect the drop in crude prices due to the lockdowns to be likely temporary amid an ongoing rebalancing of supply and demand in oil markets.
“Any tactical downside to crude will likely be temporary, in our view, pushing our Brent target of $ 65 / bbl through the end of 2021,” Goldman Sachs (NYSE 🙂 said earlier this week. “We expect the winter Covid wave to delay, but not derail, the rebalancing of the oil market, with OECD standardized stocks, OPEC + reserve capacity returning to 1Q20 levels, and and finally, the growth in shale production occurring in 4Q21. “
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New York traders made a final trade of $ 1,869.75 an ounce, after settling the official session at $ 1,872.40, up $ 10.90, or 0.6%. For the week, he lost $ 16.45, or 0.9%.
The, which reflects real-time bullion trading, last traded at $ 1,871.07 on Friday, up $ 4.77, or 0.3%. For the week, it lost 0.9%.
Gold edged up on Friday after Treasury Secretary Mnuchin said stimulus negotiations would continue, making the metal more attractive as a hedge against likely inflation.
“The idea of stimulus talks moving forward has once again supported gold as we realize that central bank liquidity and fiscal stimulus continue to be a driving force behind this market,” said David Meger, director of metals trading at High Ridge Futures.
Earlier in the week, gold was set to test four-month lows reached two weeks ago as investors juxtaposed news of vaccine developments for Covid-19 and relief these could bring with the tally of actual cases of the pandemic.