Weekly Energy
The National Bank of Canada | Feb 21, 2017 04:24AM ET
Last week, crude oil closed down slightly for the first time in a month. Some of the news impacting crude oil prices:
The OPEC agreement to reduce output levels, which is respected at 90%, is affecting global oil flows. Indeed, Russia exported one million barrels of Urals oil to South Korea for the first time this decade.
U.S. inventory levels have reached highs not seen since 1982, at 518.1 million barrels. However, according to analysis firm Bernstein Energy, inventories should fall over the next 6 months. The company believes that global demand for oil is higher than forecasted levels and will probably exceed 100 million barrels/day towards the end of 2018.
Since late December, WTI crude oil prices have been entrenched in a range between 52 and 55 USD/barrel. Price fluctuations appear to form a technical floor. As many economists expect prices to rise over the next 12 months, it could be an appealing option to take advantage of the low volatility in energy prices to implement hedging on diesel in CAD/L. We encourage our clients to contact us to discuss hedging strategies.
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