Wednesday, March 23, 2016

Oil prices hit highs for the year last week as the price of a barrel climbed above $40, helping rally what has been a slumping oil market. The climb in price comes as suppliers are hopeful that foreign oil products will strike an agreement next month to reach a global supply deal.

“The remote possibility that a coordinated supply control effort comes from this meeting, assuming it even happens, has put market bears on the defensive,” said Pete Donovan, broker with Liquidity Energy in New York, in an interview with the Globe & Mail.

Oil prices have climbed $0.50 per gallon since hitting a 12-year low earlier in the year. The price increase also comes as oil supplies in Oklahoma finally begin to drop, albeit slightly. That signifies, though, that U.S. oil supplies are dropping after months and months of gaining, signaling a change in supply.

Many analysts think there is still room for growth, though.

“We are leaving the period of low demand and starting to move toward the period when demand increases over the summer,” said Olivier Jakob, oil market analyst at Petromatrix at Zug in Switzerland, told the Financial Post. One thing that could hurt prices, though, is the slumping U.S. dollar. The dollar has dropped more than 3 percent this month. Oil is priced in U.S. dollars, so those that hold supplies in other currencies benefit from the drop.

While the future of oil prices depends large on the potential of a global supply deal, gas prices are expected to jump $0.30 to $0.40 per gallon in the coming months. That’s because of seasonal regulations put in by the Environmental Protection Agency, which requires different blends of gasoline during summer months to help fight against smog. The gasoline for spring and summer is more costly produce and that increase is passed along to consumers at the pump. More on that in our next blog post!

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• global oil market
• oil economy
• oil industry news
• oil market conditions