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Illustration: Aïda Amer/Axios

Crude prices are trading at nine-month highs after a protracted OPEC+ meeting ended with plans to just slightly boost output and fresh signs emerged of a potential Beltway deal on new stimulus.

Driving the news: OPEC+ yesterday avoided a breakdown that would have led to a large output boost in January.

  • That's helping move prices out of the rather narrow band where they've been stuck for almost six months, but they're still pretty low and hardly soaring.
  • While a months-old plan called for easing their joint production curbs by 2 million barrels per day (bpd) in January, the new agreement calls for a smaller 500,000 bpd boost.
  • The group of OPEC, Russia and allied producers now plans monthly meetings starting in January, a packed schedule that reflects the uncertain path of the pandemic and vaccines.
  • Those monthly meetings will discuss moving production another 500,000 bpd.

Why it matters: The market movement is a proxy for wider optimism about a light at the end of the pandemic tunnel, even as the virus is tragically raging right now.

  • "The market rallied to multi-month highs on demand expectations from the vaccine and stimulus, not from OPEC’s management of supply," Mizuho Securities analyst Robert Yawger said in a note.

Yes, but: The meeting outcome avoided what would have been a surprise decision to proceed with plans for a larger output boost, which would have put downward pressure on prices.

  • Goldman Sachs analysts, in a note, said the group avoided a "taper tantrum" with plans for the 500,000 bpd rise.

The intrigue: While rising prices are certainly welcome for the beleaguered U.S. shale patch, a Rystad Energy analyst said the plan for frequent OPEC+ meetings that could adjust output creates new hurdles, too.

  • "This development leaves U.S. shale producers and other market participants with less 'certainty' about OPEC+’ exact production targets going forward," Rystad's Bjornar Tonhaugen said in a note.
  • He also said: "The market euphoria will at some point soon likely fizzle out as the deal is not uniformly bullish, but rather “ok” given the demand and non-OPEC+ supply outlook."

Go deeper

Dion Rabouin, author of Markets
Dec 4, 2020 - Economy & Business

U.S. markets brace for possible inflation spike

Expand chart
Data: ISM; Chart: Axios Visuals

A spate of recent U.S. economic data releases suggest that inflation could be making a major comeback.

Driving the news: Thursday's report on the U.S. services sector for November from the Institute for Supply Management was slightly better than expected but still down from October's reading, however, the bigger story was in the prices paid index.

Dion Rabouin, author of Markets
Dec 4, 2020 - Economy & Business

Copper prices reach highest peak since 2013

Expand chart
Data: FactSet; Chart: Axios Visuals

Copper prices rose to the highest since March 2013 on Thursday, spurred by substantial increases in orders from China and expectations it will be a major component in new green energy projects.

Why it matters: Dr. Copper, as the metal is affectionately known, is a bellwether for the economy because it is used for wiring, piping and in most construction projects and household appliances.

11 mins ago - Politics & Policy
Scoop

White House plots "full-court press" for $1.9 trillion relief plan

National Economic Council Director Brian Deese speaks during a White House news briefing. Photo: Alex Wong/Getty Images

The Biden White House is deploying top officials to get a wide ideological spectrum of lawmakers, governors and mayors on board with the president’s $1.9 trillion COVID relief proposal, according to people familiar with the matter.

Why it matters: The broad, choreographed effort shows just how crucially Biden views the stimulus to the nation's recovery and his own political success.

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