After a downturn of more than 5% in crude oil prices early on, WTI ended the week essentially unchanged from the week before after the announcements by the International Energy Agency (IEA) and Goldman Sachs (NYSE:GS).
- U.S. bank Goldman Sachs announced on Thursday that it expected surplus U.S. inventory to dry up and OPEC to cut its output by 1.2 million barrels per day as promised in November.
- On Friday, the IEA announced that OPEC had succeeded in honouring 90% of its promised production cut for January 2017 and that this result represented the highest level of compliance with an agreement in OPEC history. The IEA also noted that Saudi Arabia slashed its production further than expected and that global petroleum inventories should fall by 600,000 barrels per day over the first half of 2017 if OPEC continues to honour its commitment.
- Since the output cut pact was announced in November, crude oil prices have climbed close to 25%. Now that we have confirmation that the OPEC agreement is credible, we may witness a second surge in energy prices and it may be wise to implement a fuel hedging strategy.
We invite clients to contact us to discuss hedging opportunities for your fuel expenses.
