Energy prices fell last week, with WTI, Brent and diesel dropping 5.3%, 4.8% and 2.7% respectively.
- A decision announced on Thursday by the European Central Bank (BCE) led to a sharp devaluation of the euro against the U.S. dollar. Mario Draghi, President of the ECB, announced that additional monetary easing measures will be added due to slower-than-expected growth in the eurozone. Note that a higher U.S. dollar causes purchasing countries to lose purchasing power, and this leads to lower commodity prices.
- U.S. oil inventories, released by the Department of Energy, rose by 8 million barrels on the week, growing for a fourth consecutive week. Analysts were expecting an increase of just over 2 million barrels.
- This weekend, Algeria offered support for Venezuela's request for a summit between OPEC member countries and other major oil exporting countries. The goal of this meeting is to raise the price of black gold. Venezuela is calling for an equilibrium price around $88 per barrel. Algeria and Venezuela produce 1.1 million and 2.5 million barrels per day (respectively), over 10% of OPEC production.
- Diesel prices in Canadian dollars remain near their 5-year low. These are attractive levels to budget your 2016 fuel spending by implementing hedges against unexpected increases in energy prices.
Have a good week!
Philippe Shebib