Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Energy & Precious Metals - Weekly Review and Calendar Ahead

Commodities Dec 06, 2020 07:45AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.
 
XAU/USD
-1.66%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
US500
-1.72%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
DJI
-1.62%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
PFE
-1.10%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
DX
+1.54%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
Gold
-1.75%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

Investing.com - Fueled by promises of free-flowing vaccines to stimulus, both oil and gold had a smashing week, joining record-high stocks on Wall Street on expectations that the coronavirus pandemic will end well for markets.

In a dichotomy to the daily highs in COVID-19 hospitalizations and the worst jobs recovery in the nine-month long pandemic, markets have been having a surreal celebration of risk. Investors are betting the house that the social-reordering the world has experienced since March will be reversed over the next few months as vaccines and therapeutics finally take charge.

For oil, the driver has been the surfeit of good news on the Pfizer (NYSE:PFE), Moderna (NASDAQ:MRNA) and AstraZeneca (NASDAQ:AZN) vaccine schedules. Despite some hiccoughs here and there - most notably Pfizer’s halving of the doses it could deliver by the year-end - the Dow, S&P 500 and Nasdaq all finished at all-time highs on Friday.

For crude itself, the bet is that a barrel will finish 2020 above $50 on the average - London’s Brent almost got there by Friday - and some believe it could go higher.

Even with snafus in vaccine news, the oil market seems to be taking heart from OPEC’s admirable discipline with production in times like this - agreeing to a half million barrel hike instead of a two-million jump initially feared.

Adding to the risk fervor, President-Elect Joe Biden said Friday that several - not one - stimulus of “hundreds of billions of dollars” will be needed to pull the U.S. economy through 2021. Senate Republicans, who did their best to stymie substantial Covid-19 related spending after the first $3 trillion approved under the Coronavirus Aid, Relief and Economic Security (CARES) Act in March, look cornered on agreeing to at least a $908 bipartisan deal coming down the pipe first.

Beyond what the Biden administration does, the Federal Reserve is also planning a deep-dive into bond-buying after seeing November’s unsettling non-farm payrolls that showed just 245,000 jobs being added versus expectations for a 470,000 gain.

“COVID lockdowns and restrictive measures are risking permanent scarring to the labor market and that will keep the Fed remaining ultra-accommodative,” Ed Moya, senior market strategist at OANDA in New York, said Friday.

Despite all this, some are expecting volatility in oil ahead.

“It would be naïve for traders, even the most technically-inclined, to ignore the ongoing tug-and-pull between the global economic recovery and the oil supply-demand deficit, which remains the prevailing overarching theme guiding energy markets,” Christopher Vecchio, senior strategist at Daily FX, said in a blog last week.

“We thus stick to our fundamental forecast of Q3’20 and Q4’20 as we near the end of 2020, which was calling for crude oil prices to stay elevated between $35 and $50 per barrel.”

As for gold, there are arguments on whether it has hit a wall between $1,835 and $1,850, after rallying hard from below $1,770.

The most optimistic case for the yellow metal now is a break to $1,880 and beyond. For this, much will depend on how the haven crowd buys the stimulus story from the Biden camp, and whether Republicans can resist the overtures of Democrats in Congress.

Also, two other things need to stay down for gold to go higher: the dollar - which is already at multi-year lows - and U.S. Treasury yields.

If an asset rotation suddenly happens, money could flee overbought stocks - including gold - to go into bonds instead.

“Gold's body language shows its willingness to cross into the right side of $1,900, but at the same time, technical factors call for caution,” said Sunil Kumar Dixit of Kolkata, India-based SK Dixit Charting.

“As expected, the precious metal is facing stiff resistance at $1,848 and Stochastic RSI (Relative Strength Indicator) negativity can cause some intraday correction to $1,830-$1,818. Buyers may come in at the test of $1,818-$1,820 areas and a consolidation may help gold to rally again, breaching $1,848 and reaching out to $1,866-$1,870.”

Energy Review

Crude prices hit nine-month highs and closed with a fifth straight week of gains as investors piled into oil after OPEC and its allies successfully stage-managed a production hike without rocking the market.

News that vaccine makers were working on supplying as many doses as possible before the end of December to curb the COVID-19 also boosted crude prices, amid efforts by U.S. lawmakers to pass a new coronavirus fiscal stimulus.

New York-traded West Texas Intermediate, the leading indicator for U.S. crude, last traded at $46.09 after officially settling Friday’s trade at $46.26, up 62 cents, or 1.4%. Earlier in the session, WTI hit $46.68, its highest level since March.

For the week, the U.S. crude benchmark rose 1.6%. That came after November’s whopping 27% gain, which was WTI’s best for a month since May.

London’s Brent, the global benchmark for crude, last traded at $49.05 after officially settling Friday at $48.71, up 46 cents, or 1.1%. Brent hit a session high of $49.86 earlier, its closest to the key $50 per barrel level it last traded at in February.

Brent’s weekly gain after its 28% rally in November, which was the global oil benchmark’s best for a month since May.

Oil prices have been on a tear over the past month on bets that people across the world might soon be able to travel freely as millions of doses of coronavirus vaccines were being prepared for delivery over the course of the next few weeks, after their approval by U.S. and U.K. health authorities.

“Vaccine optimism should keep the demand outlook healthy for 2021,” said Ed Moya, analyst at OANDA in New York, said in a note on oil.

Crude’s rally in the just-ended week was heightened by the ability of oil producers within the OPEC+ alliance to add just 500,000 barrels to daily production instead of an initially feared 2 million barrels.

Expectations that the U.S. Congress might agree soon to a Covid-19 fiscal stimulus also boosted the market. Stimulus plans such as these tend to weaken the dollar and boost commodities denominated in the currency, which include oil. The Dollar Index hit a six-year low of 90.47 on Friday.

Energy Calendar Ahead

Monday, Dec 7

Private Cushing stockpile estimates

Tuesday, Dec 8

American Petroleum Institute weekly report on oil stockpiles.

Wednesday, Dec 9

EIA weekly report on crude stockpiles

EIA weekly report on gasoline stockpiles

EIA weekly report on distillates inventories

Thursday, Dec 10

EIA weekly report on natural gas storage

Friday, Dec 11

Baker Hughes weekly survey on U.S. oil rigs

Precious Metals Review

Gold prices consolidated on Friday after a three-day run-up but still finished with their best week in four as investors hedging against the tumbling dollar steadfastly backed the yellow metal amid renewed emphasis for a US Covid-19 fiscal relief bill.

Gold for February delivery on New York’s Comex last traded at $1,842.10 an ounce, after officially settling at $1,840, down $1.10, or 0.1%.

For the week, though, the benchmark gold futures contract gained almost $50, or 3.3%. It was the yellow metal’s best week since the week ended Oct. 30 and erased a significant portion of last week’s near 5% loss, which was the biggest weekly plunge since July.

The spot price of gold, which reflects real-time trades in bullion, last traded at $1,837.32, down $3.65, or 0.2%. For the week, bullion rose 2.8%.

Gold is emerging from one of its most brutal sell-offs ever after dynamic breakthroughs in COVID-19 vaccines and their potential availability before Christmas caused a run on money in safe-havens.

The yellow metal lost about 6% of its value in November, its most for a month since 2016 and fell into $1,700 territory. Investors have in recent weeks directed money mostly into stock markets and other risk assets such as oil, as those witnessed an epic rally amid the notion that vaccines and therapeutics would soon bring an end to the spread of the coronavirus.

Despite the continued emphasis on risk, gold as a haven is rallying again on talk of a new U.S. Covid-19 stimulus effort, which triggered a plunge instead in the dollar, the alternative trade to the yellow metal. The Dollar Index was down more than 1% to a six-year low of 90.47.

The U.S. Congress originally passed in March the Coronavirus Aid, Relief and Economic Security (CARES) Act, dispensing roughly $3 trillion as paycheck protection for workers, loans and grants for businesses and other personal aid for qualifying citizens and residents.

In the past few months, however, Democrats in Congress have been locked in a bitter debate with Republicans in the Senate on a successive relief plan to the CARES Act. The dispute has basically been over the size of the next stimulus as thousands of Americans, particularly those in the airlines sector, risked losing their jobs without further aid.

The stalemate was finally broken last week after a bipartisan group of Democrats and Republicans proposed a $908 billion relief bill, which the two sides have been negotiating since.

Energy & Precious Metals - Weekly Review and Calendar Ahead
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (6)
VFor Vendetta
V4Vendetta Dec 06, 2020 1:57PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Dollar strength is nothing against gold. Even dollar being stay at equal level to other currencies when stimulus pumped, does not mean the dollar is not loosing buying power. More of how many other currencies is printed in regards to dollar. It is strength against other currencies, not gold. Gold is 1, always! dollar and other fiat is fluctuating in relation of one to other. cya
New Jazenevd
New Jazenevd Dec 06, 2020 1:57PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Gold is just a financial instrument, having no relation to buying power. It had this power in ancient times, when folks used coins to buy stuff. As of now, gold is a financial asset, one of many, with price set by market.
New Jazenevd
New Jazenevd Dec 06, 2020 1:32PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Oil stocks had a good week; gold stocks did not. Also, commodities are not limited to oil/gold. Copper is the most spectacular at the moment.
Chuck Deezel
AG_ToTheMoon Dec 06, 2020 1:32PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
what are you talking about my gold stocks rallied all week
New Jazenevd
New Jazenevd Dec 06, 2020 1:32PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Chuck Deezel  First of all, I did not talk about “your gold stocks”. Talking about gold stocks in general they performed worse than broad market.
Dustin Berg
Dustin Berg Dec 06, 2020 11:57AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I bought oil when it went negative, that was beyond blood in the streets it turned the tide red, I bought a ton of oil stocks that day knowing that would Never last, oil is here to stay.
Laszlo Sarosdi
Laszlo Sarosdi Dec 06, 2020 11:57AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Same here.
James Waicekauskas
James Waicekauskas Dec 06, 2020 10:51AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Blue Wave = Market Crash (Capital Gains Tax)
Show previous replies (6)
Raghu Raghavan
Aptosian Dec 06, 2020 10:51AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
New Jazenevd  Here we are talking about taxing more, the top 2% (>400K/yr) of income group. If Dems take the senate, it is possible for them to push for a stepped up Capital Gain Tax increase from the 15% to 20%, in taxable income group between $150K and $440K/yr - still it is not every investor  i.e. overall about 92% (<$150K/yr income) to 98% ($400K/yr income) of the families will not get affected by this Capital Gain Tax increase. When a generalized statement is incorrect 92 to 98% of the times, it is not right to be spreading that as if so many (general population) are affected.
New Jazenevd
New Jazenevd Dec 06, 2020 10:51AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Raghu Raghavan  How do you know that biden would stop at 400k? History projects it differently. Obama also talked initially about million-like incomes and slapped, when he got full power, tax increase on all 200k households. Also, folks making more than 400k provide bulk of capital for stock market and if they disincentivized to invest then all investors will suffer.
New Jazenevd
New Jazenevd Dec 06, 2020 10:51AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Raghu Raghavan  Also, if you talk about 150k threshold then it means almost 100% of stock investors. Low income folks do not invest in stocks. I started to invest when my household income exceeded 150k and it was many years ago when 150k was different money than now.
Raghu Raghavan
Aptosian Dec 06, 2020 10:51AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
New Jazenevd sorry, I cannot debate fear mongering and false info and no meaningfull stuff. Have a good day.
New Jazenevd
New Jazenevd Dec 06, 2020 10:51AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Raghu Raghavan  If you cannot handle truth then don’t debate.
Xolani Kunene
Xolani Kunene Dec 06, 2020 8:56AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
buy NASDAQ on Tuesday
carol sefadi
carol sefadi Dec 06, 2020 8:56AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
thanks
koblan sultaniyazov
koblan sultaniyazov Dec 06, 2020 8:20AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
qqqqq
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email