Power & Valuable Metals – Weekly advance assessment and calendar from Investing.com
By Barani Krishnan
Investing.com – The United States had its worst week for COVID-19 cases, deaths and hospitalizations. A total of 25 million barrels of crude oil, gasoline and distillate stocks have been built up on the oil market. Still, oil bulls have pushed crude oil prices to a 9 month high with the notion that vaccines will fix everything.
In the distorted lens of the oil longs, the “now” of the pandemic is lost in the country where the “future” for human health, travel and energy consumption may lie.
Most ardent supporters of higher oil prices are betting that people everywhere will soon be able to hop or travel on a plane or some form of local transport to get anywhere, anytime, as millions of doses of coronavirus vaccines hit the world over the next few years Weeks after approval by the relevant health authorities.
The truth, of course, is more complicated.
As much as Pfizer-BioNTech, Modern (NASDAQ 🙂 and other vaccine makers are confident they will deal a knockout blow to COVID-19. Immunization of this magnitude has not yet been done – not in the US, not in Canada, not in the UK, or anywhere else on the planet.
Frontline workers in New York hospitals are currently experimenting with best practices, from delivery and circulation to timing and storage.
Some states like Arizona simulate what the drive-through process will be like if patients can get the vaccine.
For those on the front lines, every day of the rehearsal counts because when V-Day comes, mistakes are costly.
The cooling of the cans is particularly important. The units used for storage must be approximately 80 to 90 degrees Fahrenheit below zero. Hospitals now do eleventh hour checks to make sure their freezers are functional.
“We get it here at the pharmacy, we have to empty the box and open the freezer within 90 seconds,” said Vivian Leonard, pharmacy director of the Mount Sinai Health System. “When something goes wrong, it’s not easy to replace. In other cases where we’ve had freezers or refrigerators that don’t work, we can replace the drug – in this case, we can’t. “
Meanwhile, Covid-19 statistics are reaching extremely alarming levels. In the United States, the number of cases has reached 16 million – up from 15 million less than a week ago – and nearly 300,000 people are now dead.
Health officials warn that hospital systems could overflow again, just like they did at the height of the pandemic in the spring. Some funerals are overcrowded, as in April, and refrigerator trucks have been brought in to store corpses. There are more than 71 million cases and 1.6 million deaths worldwide.
But none of these complications seem to matter to the oil hedge funds and algorithms that have driven prices incessantly for the past six weeks.
“The bullish tone is likely to continue if it is hoped that vaccines will bring the pandemic under control next year,” said Kazuhiko Saito, chief analyst at Fujitomi Co, in his summary
Still, he adds, “The recent rally appears to be fundamentally exaggerated as oil production in Libya and the United States is increasing with weaker global fuel demand.”
The worst was the jump of up to 1.5% last week, despite the US government reporting monstrous inventory build-ups.
Domestic rose 15.2 million barrels in the week ending December 4, the Energy Information Administration said, while analysts were expecting a decline of 1.42 million barrels instead.
The agency’s data showed that diesel fuel was up 5.2 million barrels in the week ended December 4, contrary to expectations for a 1.41 million barrels increase.
The U.S. was up 4.22 million barrels last week, according to MSRP, compared to expectations for 2.27 million barrels of construction.
However, the most optimistic oil investors have brushed aside the declining EIA report and barely allowed WTI trading prices to fall on Wednesday. In doing so, they paid little or no consideration to whether such inventory spikes will occur more frequently in the fall-winter season, when oil demand is typically lower – which has nothing to do with the ongoing effects of Covid-19, which are exacerbating the lull in fuel consumption now.
“The US inventory data showed a total of 25 million stocks were built (but) ignored,” noted Scott Shelton, energy futures broker at ICAP (LON 🙂 in Durham, North Carolina, in his comment one day after Thursday to the oil EIA report.
On the contrary, the surge in inventories “seemed to have given the bulls additional hope and marginalized the shorts even further,” said Shelton, an oil bull himself who seemed baffled by the sharp upward tilt in the market.
Not all are convinced that oil prices will continue to recover in a V-shape in the coming year, suggesting a spike in Libyan production and a quick, potential return of Iranian oil once President-elect Joe Biden beats his predecessor Donald Trump removed sanctions imposed on Tehran.
Given the volatility ahead, Moody’s forecast a lower range of $ 40 to $ 45 for Brent in 2001.
“A modest improvement in oil prices in 2021 will not prompt producers to stimulate capital investment while fuel demand will rise, but not to pre-downturn levels,” the rating agency said.
Gold investors, meanwhile, had a week’s roller coaster ride, generating a weekly profit, as talks in U.S. Congress about a COVID-19 stimulus package tumbled.
In Friday’s Congressional negotiations, Senate Republicans, led by Majority Leader Mitch McConnell and in line with outgoing President Trump, continued to thwart attempts by House Democrats to add state and local aid to the package.
The Democrats, led by House Speaker Nancy Pelosi and backed by President-elect Biden, opposed efforts by Republicans to increase institutional liability in the context of the pandemic.
“McConnell is not involved in liability protection and continues to oppose the provision of aid to state and local governments,” said Ed Moya, an analyst with New York City’s OANDA. “This week should bring a breakthrough in negotiations and not bring talks into the next week.”
The week ahead could remain nervous for gold, although Moya said a host of risky events could support the yellow metal.
New York-Traded, the leading indicator of U.S. crude oil, last traded at $ 46.55 a barrel after Friday’s session officially fell 21 cents, or 0.5%, to $ 46.57.
For the week, the WTI was up 0.7%. On Thursday, it hit a nine-month high of $ 47.73, a dramatic reversal from minus $ 40 in April with the advent of the Covid-19.
London-Traded, the global benchmark for crude oil, was last traded at $ 49.98 a barrel after trading officially fell 28 cents, or 0.6%, to $ 49.97 on Friday.
For the week, Brent was up 1.5%. On Thursday, the British crude oil class hit a March high of $ 51.05 on Thursday, surpassing the $ 50 mark for the first time since the pandemic-induced market crash that saw Brent drop below $ 15 a barrel in April.
Oil prices have been falling for the past six weeks, with the US crude benchmark rising nearly $ 11, or 31%, over the period, while the UK peer group rose nearly $ 13, or 35%.
Energy calendar ahead
Monday December 14th
Private Cushing Inventory Estimates
Tuesday December 15th
Weekly report on oil stocks.
Wednesday December 16
EIA weekly report over
EIA weekly report over
EIA weekly report over
Thursday 17th December
EIA weekly report over
Friday 18th December
Baker Hughes Weekly Poll on
Precious metal valuation
Comex in New York was last traded at $ 1,843.70 an ounce after trading officially rose $ 6.20, or 0.3%, to $ 1,843.60 an ounce on Friday.
During the week, gold rose 0.2% in February after rising $ 33 to a three-week high of nearly $ 1,880 on Monday, before falling nearly $ 40 in the next session.
, which use algorithms and hedge funds to determine direction in futures, closed for less than the February gold contract. Spot gold was last traded at $ 1,839.60 an ounce after trading officially rose $ 3.72, or 0.2%, to $ 1,839.03 on Friday.
Gold became volatile as negotiating a COVID-19 economic stimulus remained unattainable.
Congress originally passed the Coronavirus Aid, Aid, and Economic Security (CARES) Act in March, which spent around $ 3 trillion on paycheck protection for workers, corporate loans and grants, and other personal assistance to skilled citizens and residents.
However, in recent months, Democrats in Congress have been embroiled in a bitter debate with Republicans in the Senate over a gradual relief plan for the CARES bill. The argument was basically beyond the size of the next stimulus as thousands of Americans, especially those in the airline sector, risked losing their jobs without further help.
The stalemate appeared to have broken last week after a bipartisan group of Democrats and Republicans proposed a $ 908 billion aid bill that prompted both sides to resume negotiations.
Stimuli and other monetary expansion exercises typically drive inflation and fuel the gold, which serves as a hedge.