Oil markets ended the week marginally higher, hoping for a demand rebound in 2021 and a continuation of OPEC+ expected production cuts beyond 31 December. On Friday, the price of U.S. light crude (WTI) gained 1 percent to $42.15 a barrel on the December Nymex contract, while the January delivery Brent contract rose 1.7 percent to $44.96. WTI and Brent gained around 5% over the week, taking their respective gains since the beginning of the month to 17.5 percent and 19.5 percent respectively.
Gold ended the week on a bounce, rising 0.6 percent per ounce price of yellow metal jumped to $1,872.40 on Friday for the Comex’s December futures contract. However, gold dropped 0.7 percent this week as risk appetite returned. Since the beginning of the year it has risen nearly 23 percent, but has not managed to reach the $1,900 mark in recent weeks.
But overall oil demand to be increased and gold to be stabilized is possible only with the recovery of the U.S. economy amid rising Covid cases in the country, which in a medium term will be coming on the heels of anticipated economic stimulus package.
But, the Treasury Secretary Steven Mnuchin has thrown a stone into the pond by announcing that the Fed’s authority to use some of its emergency services to help recovery of the economy will end on 31 December. Initiatives that will be hurt by this move include buying schemes for corporate bonds, as well as direct lending to U.S. corporations and local governments.
In a letter to Fed President Jerome Powell on Thursday, Steven Mnuchin called for the return of $455 billion allocated by the Treasury under the “CARES Act” passed in March. In order to be re-employed, these funds would have to be made available to Congress, the Treasury Secretary said.