1. V-shaped recovery and a bull market
– While the V-shaped recovery hopes were dashed for 2020, the highly-effective vaccines set to be made available in the coming months promises a swift recovery in the latter half of 2021.
– But the story could be even bigger. Goldman Sachs says that the “recovery in commodity prices will actually be the beginning of a much longer structural bull market for commodities.”
– The investment bank said there are three main drivers: under-investment in supply, Covid-related fiscal stimulus, and a weaker dollar combined with inflation risk. All add up to a bull market in the coming years.
– Goldman says the 2020s could see a “structural bull market on par with the 2000s.”
– But the story doesn’t end there. The bank adds that green stimulus capex could be as big as BRIC’s investment 20 years ago, but developing countries (particularly China) will also see a consumer spending boost that did not occur the last time around.
2. OPEC+ probably needs to extend
– OPEC+ is scheduled to unwind the current production cuts of 7.7 mb/d to just 5.7 mb/d beginning in January. But the group has sent signals that they may have to wait on the production increase.
– Refining runs in the Atlantic Basin – Europe and the U.S. – remain at the lowest levels in two decades. Much of Europe and the U.S. is suffering through the worst coronavirus wave yet, prompting…