The regulatory approval of the Pfizer (NYSE:PFE) vaccine in the UK and the prospect of more stimulus in the U.S. may be helping to support oil prices today. Brent and WTI have both rebounded strongly and are once again pushing last week's highs. Both saw strong technical support around their summer peaks and have since rallied strongly. Whether that can be sustained will depend on the outcome of tomorrow’s OPEC+ meeting.
Disagreement forced the group to push back Tuesday’s meeting until a solution could be found. It was previously expected that planned increases of 2 million barrels in January would be delayed, but with prices having rallied strongly over the last month, some seemingly don’t see the need, given the risk of handing an advantage to U.S. shale again.
Today’s rally may suggest expectations may have been pared back and traders may be comfortable with a more phased-in approach. A lot of positivity is priced in at this point though, so we can’t write off the possibility of any announcement being a profit-taking catalyst, barring a significant over delivery.
Gold Enjoying Some Reprieve
Gold is continuing to see some reprieve after coming off its lows on Tuesday. The prospect of stimulus was one of the upside risks for the yellow metal and all the speculation is giving it a big lift. Whether Congress can deliver and gold can capitalize on it is another thing. There remains a major barrier above around US$1,850; a break above that could be a significant move, although significant near-term challenges remain.
The path of least resistance is still below in my view, in the near-term at least. Partly due to my lack of faith in Congress to deliver in any meaningful time or way. Longer term, I don’t think gold's flirtation with US$2,000 is over, but I do think it may test its recent lows again first.
Bitcoin Pausing Ahead Of US$20,000
Bitcoin hit another record high yesterday before paring back. It's struggling to take another run so far today. This is a big psychological barrier, albeit one I fully expect it to overcome and probably very soon. Once it does, the hype around it could propel it much higher initially.
Should it fail to break those levels, then it could be setting up for quite a punchy double top, and treat us to the kind of correction we’ve seen in the past. I am not currently of the view that this will happen at this point. I still feel we’re in early bitcoin-hype mode. Don’t get me wrong, it’s a case of 'when' rather than 'if,' but I don’t think the 'when' is now. Bitcoin always has surprises up its sleeve, though. It’s what makes it such an interesting instrument to follow, albeit a highly speculative, volatile one.
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