1) The price of oil advanced as shrinking U.S. crude inventories added to expectations of a tighter global supply outlook after Saudi Arabia surprised the markets by pledging to reduce production for the next two months. Gasoline demand is falling to its lowest level since late May, spelling trouble for refining margins as a tighter global crude balance and straggling demand crimp profits for processing a barrel of oil. Saudi Arabia has decided to reduce crude output in February and March as part of an OPEC+ supply agreement. With the outlook for crude oil supply suddenly looking tighter, the oil options markets have grown less bearish.
2) A top scientist explains why a more infectious coronavirus variant is a bigger problem than a deadlier strain, with the deadly coronavirus having now mutated. One variant, called B.1.1.7, is more infectious, and has forced the UK into national lock down, with the variant having also been discovered in several US states, as well as other countries around the world. However, the new variant does not appear to be more deadly, so existing vaccines should also work against it. A really severe disease that one person gets won’t necessarily have as much impact as a lesser disease which a huge number of people get. While not any more deadly the new mutant B.1.1.7 is much more infectious, and is to blame for the surging numbers of people infected, filling up UK hospitals that forced the national lock down. It is estimated to have a 71% higher growth rate than other variants.
3) North Korea’s supreme ruler Kim Jong Un has announced a military expansion, but it is unclear if Pyongyang plans to ramp up its nuclear program too. This could put pressure on the incoming Joe Biden administration just when it is most vulnerable. North Korea plans to boost its military capacities in defiance of international sanctions, as well as a new five-year economic plan, admitting the previous program has failed. It’s unclear just what the military expansion will involve.
4) Stock market closings for – 7 JAN 21:
Dow 31,041.13 up by 211.73
Nasdaq 13,067.48 up by 326.69
S&P 500 3,803.79 up by 55.65
10 Year Yield: up at 1.07%
Oil: up at $50.91
Oil: up at $50.48