US equities higher on expectations of further stimulus
US stocks are aiming for fresh record highs as stimulus payments arrive at American bank accounts and after the UK signed off on the COVID vaccine from AstraZeneca and the University of Oxford. Risk appetite remains unfazed to the current dark period of COVID in the US that is recording over 3,000 daily deaths. Yesterday’s death toll was a record at over 3,700 lives lost, which included the passing of Congressman-elect Luke Letlow from Lousiana. It seems that devastating news on the COVID front for Wall Street is translating into rising expectations that the Biden administration will provide more stimulus in the first 100 days. With the Fed anchored in all their extraordinary levels of accommodation, vaccine rollouts disappointment will keep the pressure on Congress to do more in the first quarter.
The S&P 500 index pared gains after reports Moderna’s COVID vaccine shipments to Texas were delayed by temperature issues.
Oil shrugs off huge crude drawdown
Crude prices are little changed after the EIA crude oil inventory report posted the biggest draw since late October. US stockpiles fell 6.1 million barrels, more than the consensus estimate of a 3.1 million draw. It was a bullish report as US crude exports increased to a nine-month high. The US shipped out 3.6 million b/d of crude oil last week, a 17% rise on a weekly basis, the third consecutive gain.
WTI crude initially rallied on a weaker dollar and bullish US stockpile report but that was short-lived on vaccine distribution disappointment. House Speaker Nancy Pelosi’s comments that the Trump administration is holding up vaccinations provided another reminder that Operation Warp Speed is falling well short of its goals. For the crude demand outlook to improve, vaccinations need to be happening a lot faster.
OPEC+ will not be in a rush to raise output as US crude production was unchanged. The battle for crude market share will be the story that accompanies the global economic recovery in 2021, but for now, oversupply concerns are at ease.
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