Energy prices quickly turned around last week in the wake of last month’s correction. Prices for WTI crude, Brent crude and diesel denominated in US dollars rose 8.8%, 8% and 7.5%, respectively on the week.
- Last week saw a jump in bullish positions held by speculative funds and other large speculators, from 57,372 to 159,827 contracts. This newfound energy could take the market as far as the highs in crude prices reached in June.
- Data released last week showed a sharp drop in U.S. energy stocks: crude was down 2.5 million barrels and gasoline dropped by 2.7 million barrels. This came as good news and helped drive up prices for our fuel.
- Earlier in the month the Saudi Arabian Minister of Energy mentioned an upcoming informal meeting of OPEC in September, and this helped inject new life into energy prices. However, there is still no consensus in the cartel on a production freeze, and Iran has yet to decide whether it will attend the meeting. But Russia has said that it will attend.
- Even if fuel prices rose by close to $0.05/litre last week, we are still almost $0.25/litre short of the prices paid two years ago. Many of our customers have managed to lock in a portion of their fuel budget during the recent downturn in energy prices. Those who were not as lucky could consider leaving us orders at CAD 0.02/litre below current levels to obtain attractive hedges and take advantage of market volatility.
