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It is beginning to look a lot like Christmas, as the markets start to slow. Take a look at the fives and 1Os, with yields rising once again, as covid strains give confidence a blow. It’s beginning to look a lot like Christmas, Trump demands much more. So the prettiest sight you'll see with the money flowing free, right to your own front door.

President Trump may be causing more uncertainty surrounding the covid relief bill in what he calls a “mountain of pork”. He is demanding that they raise the amount from a “ridiculously low” $600 for individuals to $2000 for individuals and $4000 for couples. He pointed to some of the billions of dollars for foreign governments and special interests. What is amazing is that Nancy Pelosi seemed to agree and said she would take it up immediately and call for a vote on it. “At last, the President has agreed to $2,000 - Democrats are ready to bring this to the Floor this week by unanimous consent. Let’s do it!".

If we get a bigger bill and money into the pockets of Americans, that should bode well for energy demand even as the markets are fretting about this new strain of the coronavirus. This may actually offset some disappointing data from the American Petroleum Institute (API).

The API reported that crude oil supply increased by crude 2.70 million barrels. Cushing, OK was up 341.000. Gasoline down 224,000 and distillates up 1.03 million barrels. We expect the Energy Information Administration (EIA)  to show a draw in crude so let’s see if they agree. 

Despite holiday profit-taking, the oil trend is still on its upward track. Even Iran is impressed with the way the oil market is getting in balance. Reuters reports that PEC+ policies have helped so far to balance the oil market, Iranian Oil Minister Bijan Zanganeh said on Tuesday, adding that he was hopeful that the group could maintain prices at “suitable” levels. “Fortunately OPEC+ measures have been fruitful so far. I hope we can maintain oil prices at a suitable level,” Zanganeh was quoted as saying by Iran’s SHANA news agency after a meeting with Azerbaijan’s oil minister Parviz Shahbazov. The Organization of the Petroleum Exporting Countries and other producers including Russia, a group known as OPEC+, agreed in early December to ease their output cuts from January by 500,000 barrels per day.

Natural gas is dipping but still has seen a nice comeback. Andrew Weissman at EBW Analytics says that the January natural gas contract has continued to increase over the past week, overcoming near-term warmth and a soft EIA Weekly Storage Report. By early next year, however, the gas market is likely to be facing down evaporating storage surpluses and rapidly emerging storage deficits driven by a tight weather-normalized supply/demand balance–likely prompting further gains. At the same time, the growing possibility of cold weather at the height of mid-winter, when space heating demand per degree day is structurally higher, holds the potential for further notable natural gas price gains. Emerging natural gas storage deficits are not confined to the United States, with a deepening European deficit creating another bullish signal for summer 2021.