Crude Oil continues to hover around 50 USD/bbl., with Brent ending the week at 49.75 USD/bbl. and WTI at 48.75 USD/bbl. Brent traded over $50 on multiple occasions, but could not manage to hold on to those gains. Brent and WTI closed the week up 1% and down 1%, respectively.
- On Thursday, OPEC had its second and final official meeting of 2016. The main conclusion of the organization’s discussions is that the status quo will be maintained; that is, production limits will not be reestablished (recall that they were eliminated in January). While there were rumors that a production maximum for the group could be instated, the member states failed to reach a suitable arrangement. However, as many commentators have pointed out, OPEC rarely follows its production guidelines, and was unlikely to do so this time. The markets were unsurprised by the meeting, with crude basically flat over the past few days. This was the first OPEC meeting for Khalid Al-Falih, Saudi Arabia’s new oil minister, who has stated that he hopes to use his large influence to promote increased cooperation between OPEC countries.
- American employment results released on Friday were extremely disappointing, causing a significant depreciation of the USD. Analysts were expecting that 160,000 new jobs were created in May; the actual value came in at only 38,000. This is lowest level of job growth in nearly 6 years. Perhaps an indication that the U.S. economy is suffering, this news makes it less likely that the Fed will raise rates in the near future.
- Refined products were relatively stable last week, with diesel flat and gasoline down by 1.5% over the five days (both when measured in USD/gal.). The loonie appreciated by roughly 1% on Friday, so diesel and gasoline in CAD/L dropped by 1% and 2.5%, respectively. Diesel is trading at 0.51 CAD/L, still below prices seen as recently as 10 months ago.
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Have a great week!
Philippe Shebib