Democratic Wins Brings Hopes for More Stimulus
January 8, 2021
Oil prices are up again this morning hitting an eleven month high. The certification of the election and the Democratic wins in Georgia bring the hope of more stimulus which is supportive to prices.
The production cuts offered up by Saudi Arabia of 1 million barrels per day for February and March has created more buying as this move has reduced some of the concerns about an over supplied market. This fact by itself is bullish and has cause more crude buying which I am sure was what the Saudis had hoped. The other side of the coin that could negate some of this bullishness is the continued spread of the coronavirus and the restrictions being put in place as a result that reduce energy demand. These factors are the big pieces of the price puzzle moving forward. The other major driver is the overall outlook for later this year. This includes the economic outlook, the vaccine outlook, the virus outlook etc. Most of this is very positive and many analysts think the back half of the year will see a resurgence and this hope is also supportive to prices.
The December jobs number was down 140,000 and the expectation was up 50,000. The unemployment rate is at 6.7% and the estimates were 6.8%.