Last week, crude oil price volatility showed how nervous markets are in the run-up to the meeting of OPEC member nations this Wednesday (November 30). While crude oil prices were up early in the week, they dropped substantially during the day Friday, to close out the week at $46.06 USD/barrel.
Among the developments influencing markets:
- Saudi Arabia has allegedly pulled out of discussions with certain non-members of OPEC such as Russia, as the countries were unable to agree on the allocation of production cuts. However, Iraq has indicated that the country would take part in an agreement while Russia reiterated that it is prepared to freeze its output at current levels.
- Many analysts believe it is highly probable that OPEC will reach an agreement. JPMorgan (NYSE:JPM), to name just one, places the chance of an agreement at 60%. The International Energy Agency forecasts that crude oil prices could hit $60 USD/barrel in the event of an agreement.
- According to oilfield services firm Baker Hughes, the number of wells in operation in the United States has been rising since June 2016, with 471 wells in operation at the end of the week of November 18, 2016.
- The Canadian dollar lost value over the past week. It is important to keep in mind that a declining Canadian dollar will increase fuel prices in CAD/litre.
We encourage our clients to contact us before the OPEC meeting to discuss hedging their fuel expenses in CAD/L. Have a great week!