Oil prices are eager to find higher ground this week, with a bullish OPEC meeting setting the stage for an expected OPEC cut later this week. This morning crude prices are once again on the upward mend, trading at $53.83 with 88 cent gains (+1.7%).
Fuel prices are seeing even faster growth, although gasoline is in part making up for yesterday’s small loss of a penny. This morning diesel is building on yesterday’s 4 cent gain with another 4.2 cent gain (+2.2%), trading at $1.9291 currently. Gasoline is trading at $1.4692, up 3.8 cents (+2.6%).
In addition to positive developments in US-China trade relations and agreements between Saudi Arabia and Russia to cut production in 2019, Canada also announced reduced output in Alberta, cutting output by 325 kbpd in January. Alberta’s production is roughly 3.7 MMbpd, but pipeline capacity out of the region is just 3.5 MMbpd, creating a steep local oversupply that caused Canadian crude to fall to just $10 a barrel – far below what other global producers earn.
The cuts will provide an opportunity to offload the 35 million barrels in local storage, which producers hope will boost prices higher than their current levels. The cuts won’t have a major influence globally, but could lift WTI crude prices slightly.