Oil stable ahead of EIA inventory report
Crude prices are stabilizing ahead of the EIA crude oil inventory report that is expected to show stockpiles declined by 2.9 million barrels. Yesterday’s API report showed inventories rose by 2.7 million barrels.
Oil has had a rough week as concerns grow that short-term crude demand outlook might be much weaker as the winter wave of the virus intensifies and new strain risks are triggering wider lockdowns.
If US lawmakers are able to quickly resolve President Trump’s last-minute demands over stimulus, crude prices could catch a bid. Trump caught the markets and Congress off-guard by threatening to use a veto to reject the stimulus bill which Republicans and Democrats have hammered out after a long standoff.
Gold remains in choppy waters
Gold prices are little changed awaiting the Republican response to President Trump’s last-minute demand to boost direct payments to Americans. Gold initially sold off after Trump’s move sent shockwaves and sparked fear that Congress might not be able to deliver any stimulus. Wall Street is still expecting a coronavirus relief bill to pass before December 28th.
Gold could have a choppy rest of the year, but if Republicans capitulate and the price tag of stimulus grows, Gold could break above the USD1900 level.
Bitcoin consolidates ahead of Christmas
Bitcoin is consolidating ahead of the shortened trading week. Broad crypto weakness is emerging early in North America as profit-taking occurs ahead of the Christmas period.
An influx of new investors has provided many reasons to be short-term bullish, the largest cryptocurrency. Money managers who have underperformed are likely going to jump into the cryptoverse and will likely want to show their investors that they are not missing out on the best performing asset of 2020.
Thin conditions will persist till year-end and that should easily allow Bitcoin volatility to test the USD20,000 or USD25,000 levels.
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