Last week was marked by a sharp drop in prices in the energy market. WTI crude, Brent crude and diesel fell 3.55%, 5.05% and 3.54%, respectively. On Friday, July 29, WTI and Brent were trading at prices below their 200-day moving averages for the first time since April of this year.
News items that moved the markets included:
- Oil inventories, as published by the U.S. Energy Information Administration on Wednesday, took markets by surprise. A 1.7 million barrel increase in inventories was reported, while analysts were expecting a 2.1 million barrel drop.
- Libya’s largest oil ports will open again now that a settlement has been reached in the conflict between the Presidential Counsel and the brigade controlling the facilities. Libya produced 1.6 million barrels per day before 2011, compared to production of 320,000 barrels per day last month.
- In an environment characterized by lower energy prices and lower refining margins, Shell (LON:RDSa) Oil (NYSE:RDSa) reported its lowest profitability in 11 years. The company reported having missed expectations in its three business segments.
- Iraq is negotiating with Exxon Mobil Corporation (NYSE:XOM) and Petrochina Co. (NYSE:PTR) to develop two oil fields in the south of the country. According to the Deputy Oil Minister Fayyad Al-Nima, the goal is to maintain production at 4.8 million barrels a day for the rest of 2016.
It was a busy week in commodities as many clients took advantage of attractive prices for diesel in CAD/L to implement hedges. We encourage you to call us to discuss hedging strategies for your fuel spending in CAD/L.
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Have a great week!