Energy markets were on a familiar course again last week, as the price of WTI crude fell for a seventh consecutive week. Diesel and gasoline, which have reached levels not seen since 2009, are approaching the record lows of the last financial crisis. We believe that a very good opportunity may be just around the corner, but are waiting for prices to stabilize before actively recommending that clients implement new transactions.
- The impact of the correction is being felt in the U.S. industry, which recorded the largest weekly drop in the number of active drills in 24 years. According to data released by Baker Hughes Inc., the U.S. now has 1,421 drills in operation, down 61 on the week and 154 fewer active drills than in the beginning of December 2014. This trend should accelerate over the next few weeks, and the first signs of its impact on output should become apparent by mid-2015.
- The pressure continues to mount on the U.S. President over the Keystone XL pipeline. The Supreme Court of Nebraska decided in favour of the pipeline?s route through the state, but President Obama has said that he would use his veto to stop the project. Canadian oil producers would benefit from Keystone XL, since they sell crude at a close to $15 per barrel less than WTI.
In Quebec, 2015 began with higher fuel prices for businesses and individuals. Quebec is the only Canadian province participating in the carbon market, and this resulted in a $0.02/L jump in the price of rack diesel across the province compared to prices paid in other provinces. In contrast to the excise tax and the road-use tax, which are fixed amounts per litre, the carbon tax is included directly in the base price seen by clients.
Emmanuel Tessier-Fleury