The reports leading into the OPEC meeting became reality. The cartel and its friends outside the group will extend the oil production deal for another nine months, through March 2018. The conditions remain the same, including the exemptions for trouble-stricken Libya and Nigeria.
The price of oil was front-running the meeting. And as in many similar cases, the actual announcement was followed by a setback. This is a classic “buy the rumor, sell the fact”.
Exemptions to blame?
Or maybe were the extended exemptions for Libya and Nigeria responsible for the drops? The devil may be in the details. Libya is a de-facto defunct country, but oil production is on the rise. Nigeria suffers from an insurgency but also there, things are stabilizing.
If both African countries continue ramping up production and continue enjoying the exemptions, their surplus supply could take the sting out of the OPEC cuts.
USD/CAD rises from the lows, following oil
When the ministers were meeting, WTI almost touched $52, it dropped to $50 and stayed hovered above $51. And when the deal is announced, we have another fall all the way to $49.
The Canadian dollar had a busy 24 hours. At first, the Canadian dollar focused on the decision by the Bank of Canada. The BOC saw the glass half full. Optimism about the economy sent the C$ up and USD/CAD down.
Yet after hitting low support just above 1.3380, the oil news reverses the trend. USD/CAD is currently battling the old line of 1.3460.
Further resistance awaits at 1.3540.
Will oil prices drag the loonie down?
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