It seems that one of the most popular market that is gaining the most this week is crude oil. The price of a contract for a barrel of WTI oil has increased by almost 5 percent over the last few days, so it is possible that we could be observing the third week in a row of price increases of this market.
It seems that the trend we have been observing in recent weeks may be due to the fact that OPEC+ will delay the planned increase in production levels to compensate for the drop in demand resulting from further restrictions due to the pandemic. There were also announcements of resuming talks on the American stimulus package. The leader of the Republican majority in the Senate, Mitch McConnell, has agreed to resume talks on providing more aid due to COVID-19. The progress on the vaccine, in turn, could result in a fairly rapid recovery in demand for fuel, but it seems that this will only happen in the second half of 2021.
The weather forecast lowers the price of natural gas
The market that seems to be losing most this week is natural gas contracts. The price dropped by almost 12 percent in just one week. One of the factors seems to be the update of weather maps by the National Oceanic and Atmospheric Administration. The updated forecast of temperatures in the United States within 14 days indicates higher than average values. As a consequence, the demand for natural gas in the USA may decrease, which may also result in a price drop.
In November, natural gas contracts fell by a total of about 20 percent, to levels recently observed in mid-October. There are many indications that we are currently observing a correction of the earlier upward trend, which in turn was to appear due to the expectation of a cold winter in the USA.
Good times for cryptocurrencies
This week the crypto market started to attract investors' attention when the price of bitcoin rose to its highest level since 2017. Thus, the BTC/USD rate is close to its records, being in the area of USD 18300.
It seems that we are currently seeing a market phase that is growing due to institutional demand, as indicated by the increase in the open interest on the futures market and the generally growing volume of transactions. This is why the crypto market may begin to attract more and more attention from investors, including Wall Street investors with the prospect of the first ETF for bitcoin after the current head of the SEC ends his term in December.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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