Oil up on OPEC+, gold remains steady

Oil jumps again on OPEC+ deal

Oil prices jumped again on Thursday as OPEC+ reached a deal for the coming months, with production rising only 500,000 barrels in January now, compared with two million agreed previously. The aim is to hit the two million increase now by April, according to Russia’s Alexander Novak.

The deal may fall short of what the markets were hoping for, being a full three-month delay, but it’s certainly a significant compromise, with countries also being given until the end of March to make up compensation cuts. With the second lockdown not being as detrimental as the first to demand, the group is able to continue to increase production but at a slower rate than previously envisaged.

With Brent coming very close to USD50 today, before seeing some profit-taking, markets clearly approve which will come as a relief. The group will continue to review on a month by month basis and given the flexibility they’ve shown, the prospects for the oil price look much better than they did a month ago.

Gold remains below key resistance

It’s been some week for gold. It started the week hitting five-month lows but has ended it with a strong rebound and is close to testing USD1,850, the area that proved to be such a big support level between August and October. Gold was left out in the cold in the aftermath of the vaccine announcements but has been welcomed back with open arms as stimulus talks have got underway in the US.

Whether it will have enough to sustain these gains is another thing. I remain sceptical about the stimulus chances, although there does appear to be growing support around the bipartisan proposal that’s been put forward. The next week will be crucial but should it get over the line alongside a spending bill that averts a shutdown, the yellow metal could do very well.

Bitcoin dragging its feet

Bitcoin has lost its way a little these last few weeks. Don’t get me wrong, there’s no lack of volatility there but it’s lost its buzz. We know that USD20,000 is a major psychological barrier but bitcoin usually thrives on hype and there was no shortage of that, as it’s repeatedly charged towards it, squeezing out new record highs in the process.

I’m sure it’s only a matter of time until the resistance falls and we’re seeing explosive moves once more. The risk is that these repeated failures become the catalyst for more profit-taking and the cryptocurrency finds itself testing the USD16,000 late November lows instead. A break of this could be troublesome in the near-term.

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