Gold 1944,09
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EURUSD 1,2296
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DJIA 30241,50
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OIL.WTI 50,015
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DAX 13705,18
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The first 2 trading days of the new year have been extremely volatile for black gold. Take a close look at the chart below. On Monday we saw a strong reversal red candle, which first showed a new high for the last 10 months. And on Tuesday another reversal candlestick, but a green one, with an even longer daily range. So what happened in the market?
OIL.WTI
Monday
On Monday, two events collapsed the oil price at once. UK Prime Minister Boris Johnson announced the start of the third lockdown. In his statement he mentioned that the number of patients in the healthcare system is already 40% higher than the spring peak. At the same time, the rate of new hospital admissions is increasing. Mortality rates are also rising.
That would be all well and good. But we know that with some lag the situation could repeat itself in continental Europe and then in the US. This would be a huge blow to the already low demand for oil.
Talks that Russia and Saudi Arabia cannot agree on a cap on oil production in the new year have also added fuel to the fire. Against this backdrop, the oil price simply plummeted on Monday.
Tuesday
Tuesday, however, brought us new news. Apparently the OPEC+ countries have realised that the negotiations cannot drag on any longer behind the scenes. Otherwise the situation of spring last year might repeat itself, when even a sharp reduction in oil production could not stop the strongest fall in prices.
Representatives of Russia and Saudi Arabia reached an agreement under which the current limits on the volume of oil production for the first 2 months of this year are fully maintained. This was reported by the Wall Street Journal (WSJ), citing its own sources of information.
This decision is to be approved at the negotiations of OPEC+ countries on 5-6 January. At the same time according to the latest data, Russia will still be able to increase oil production by 65 thousand barrels per day.
On Wednesday, we are in for a very interesting day. A third reversal candlestick in a row is possible. On the back of profit taking after the OPEC+ agreement and the worsening situation with COVID-19.
14.00 German consumer price index for December
14.15 ADP private sector employment report for December in USA
20.00 US Federal Open Market Committee meeting minutes
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