Oil flat as JMMC meet, gold up on stimulus hope

Oil may be pricing it postponement of January output increases

Oil is trading a little flat at the start of the week but continuing to hold on at the upper end of its post summer range.

That’s some going when you consider all of the downside risks that remain but clearly there is a confidence that OPEC+ will act in a way that maintains these prices. The JMMC meets today to evaluate the current measures so we won’t have to wait too long to see how compliant members are being and whether more is necessary.

I doubt members would sign up to new cuts at this juncture but they may be persueded to postpone reducing cuts by two million barrels from January. Perhaps this is what traders are feeling more bullish about. The risks remain firmly tilted to the downside.

Gold stimulated by noises from Capitol Hill

Gold is up around 1% on the day as the dollar pulls back at the start of the week.

The greenback is coming off a decent week but it is giving up most of those hard fought gains in early trade. The prospect of a stimulus package being agreed that’s in the ballpark of what Pelosi and the Democrats are proposing is probably behind this, with the dollar typically preferred in times of risk aversion.

Still, I don’t think this is yet that bullish for gold. A deal is still very much not agreed and there remains a number of major downside risk factors for riskier assets, which is what gold now finds itself aligned with. The yellow metal remains within its ever tightening range, a breakout from which looks likely in the next couple of weeks.

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