The price of oil jumped in the largest 2-week increase since the spring of 1998, suggesting that the worst of the correction may now be behind us. As we mentioned in last week's column, we believe that this is a very good environment for implementing hedges on fuel prices.
- Despite the fact that prices have rallied 13.8% since markets closed on January 23, 2015, we believe that crude oil and refined products have entered a consolidation period that could eventually lead to a more significant jump in prices. Current levels are too low to stimulate new production, and the billions of dollars in cuts announced by the main oil production companies will have a major impact by the end of the year and in early 2016.
- Drilling operations are still in retreat in the U.S., where 83 drills were pulled out of service last week. U.S. output nevertheless continues to grow, and this has led to very high inventories south of the border. Feel free to contact our team any time to make a transaction and/or for price information.
Have a great week.
Emmanuel Tessier-Fleury