Oil and gold steady, bitcoin rises

Oil pares losses on inventory report

Crude prices pared losses after the EIA crude oil inventory report posted a larger-than-expected stockpile draw.  Crude oil inventories fell 3.1 million barrels more than the consensus estimate of a decline of 2.2 million barrels.  The big draw was attributed to a sharp 1 million bpd drop with imports and an 800,000 rebound with exports.

The report was not all bullish as gasoline demand continues to plummet, marking the fifth straight week of rising gasoline inventories.  US crude production declined for the first time since late October, but still remains over 11 million barrels a day.

WTI crude remains stuck in the mid-to-high USD40s and it doesn’t seem that will change anytime soon.

Gold eyes Fed meeting

Gold prices pared most of its gains as investors pare back stimulus bets ahead of the Fed’s policy decision, which seems like a coin flip if they will provide guidance on asset purchases.  Gold initially rose on optimism that a stimulus deal could be reached today.  Senate Majority Leader McConnell noted they are making good progress on passing something by Friday.

Complicating the short-term outlook for gold has been a wave of new traders preferring bitcoin over precious metal as their bet against the dollar and unprecedented stimulus efforts from the US.  Stimulus bets normally support gold, but today’s relief bill optimism by Congress could allow the Fed to wait until the next policy meeting to adopt yield curve control.

Gold’s path higher is still there, it just might take a while longer to get if the Fed doesn’t deliver today.

Bitcoin surges past 20,000

The crypto world is celebrating bitcoin’s break of the USD20,000 level.  Today is vindication for many bitcoin enthusiasts that remained undeterred following the tulip-mania collapse that occurred two years ago.  It goes without saying that the importance of breaking this key level on the last full trading week of the year could be considered very bullish for cryptocurrencies.

If you are an asset manager and not trading cryptocurrencies and your fund is underperforming, you might have trouble raising capital.  Institutional money is scrambling for finding yield and right now bitcoin is providing many opportunities.

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