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Commodities and Cryptos: Busy on the oil front, Gold coils up, Bitcoin steadies

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Oil

Crude prices slumped as the dollar firmed up and after OPEC Secretary General Barkindo noted that oil stockpiles are stubbornly high, highlighting that OECD stocks are still over 160 million barrels and above their five-year average. The EIA crude oil inventory helped oil prices pare losses after delivering a slightly larger-than-expected draw. Crude oil stockpiles declined to the lowest levels since March and exports fell over half a million barrels. US crude production remained unchanged.

Optimism is brewing for J&J’s COVID vaccine and that could tentatively keep WTI crude supported around the low-$50s. Unless the dollar rebound accelerates, it will be hard to make an argument for lower oil prices.

Gold

Gold might look cheap to some considering a wave of dovish Fed speak, strong demand for US Treasuries, and on mounting skepticism over cryptocurrencies. The bullish catalyst for gold could come from Fed Chair Powell and/or Biden’s multi-trillion-dollar stimulus package. The prospects of more stimulus will remain the first half of the year playbook for gold, while the second half will focus on inflation.

Core inflation remains stuck at 1.6% and that will not excite inflationary hedges. Gold is coiling up right now and could be ready to accelerate higher if Powell and Biden don’t disappoint on Thursday.

Bitcoin

Bitcoin is behaving like a risky asset today, turning positive after US stocks rallied on dovish Fed speak. Bitcoin is holding up nicely considering a recent run of bad press from the U.K.’s Financial Conduct Authority to ECB President Lagarde’s extremely harsh comments on money-laundering and scams. The liquidity crunch is not going away anytime soon for Bitcoin and that should support prices trading between $30,000 and $40,000.

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
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