The GERM Report

-Reddit takes over the world!

-There seems to be some enthusiasm building in the market

Crude oil prices got a boost during Monday trading by the swell in demand for winter fuels as a massive snowstorm buried the US East Coast with well over a foot of snow. The week ahead will be chock full of goodies on the demand side from annual forecasts to the next meeting of the OPEC-led committee monitoring production restraint. Some of the rush, meanwhile, may be a contagion effect from the retail traders plotting their revenge.

The price for Brent crude oil was up by 2.3% from Friday’s close to trade at $56.28 per barrel as of 2 p.m. ET.

Hard data show the economy, at least the US economy, continues to struggle under the weight of the pandemic. While expansionary on paper, the latest PMI reading on US factory activity took a slide last month. The manufacturing PMI in January showed a 1.8 percentage point contraction from the previous month, but at $58.7 was still on the positive side of growth.

“Survey committee members reported that their companies and suppliers continue to operate in reconfigured factories, but absenteeism, short-term shutdowns to sanitize facilities and difficulties in returning and hiring workers are continuing to cause strains that limit manufacturing growth potential,” Timothy Fiore, the chairman of the Institute for Supply Management Manufacturing Business Survey Committee, said in a statement.

That data would normally would not be this supportive of economies, though Tamas Varga, an analyst at London oil broker PVM, told The Houston Chronicle this week that he was expecting some of the frenzy generated on Reddit discussion boards could spill into the commodities market as retail investors move from GameStop to silver.

“Stock markets will probably set the tone for oil prices next week,” he said.

Elsewhere, and while the tea leaves are hard to read at this point, the global vaccination campaign against COVID-19 continues, albeit in fits and starts. That could support futures, where trade structures for both Brent and West Texas Intermediate are in backwardation, suggesting demand is outpacing supplies. On Monday, the Federal Reserve Bank of Atlanta revised its estimate for first quarter GDP up from 5.2% to 6&.  That enthusiasm could be a factor later this week went the committee monitoring OPEC production restraint review the current market situation. They need a Goldilocks moment, however, lest they incentivize shale oil production in the United States.