Last week, energy prices in U.S. dollars continued to decline. WTI crude, North Sea crude and diesel fell -2.1%, -3.5% and -4.6%, respectively.
- The latest meeting of the Organization of Petroleum Exporting Countries (OPEC), held on Friday in Vienna, Austria, did not have as much impact on markets as its meeting of last November. At that time, prices for crude fell 20% over the following two weeks. In contrast, market prices had risen slightly by the end of the day on Friday.
- OPEC announced that it will not be changing its production quotas, keeping them at 30 million barrels per day. The latest figures show that member countries have been producing 31.5 million barrels per day, so they are falling short of full compliance. Production by cartel members has reached its highest level in close to three years.
- OPEC has decided not to give up any market share to non-OPEC countries; this was also the message it delivered after its last meeting. Given how energy markets responded on Friday, we can safely assume that prices were already fully reflecting OPEC's position.
- On Friday Baker Hughes (NYSE:BHI) reported that there were 868 active drilling rigs in the U.S. Once again, this is the lowest level seen in several years. It was slightly below the low of 2009, when the rig count fell to 876.
- We are still recommending that clients take advantage of market volatility to leave orders at just a few cents below current prices. The price volatility on Thursday allowed several of our clients to lock in supplies at attractive prices. Have a good week!
Philippe Shebib