OPEC is confident that the agreement will be honored and production levels will fall. Crude stockpiles rose in the US for a third consecutive week, as the surplus of 2.8 million barrels easily beat the forecast of 1.5 million. However, as oil prices have moved above the $50 level, US shale producers have stepped in and raised US crude production. The agreement took effect on January 1, and oil producers expect the deal to remove 2 percent of global supply from the markets. The first is the landmark deal hammered out between OPEC and other major producers to cut oil production in an attempt to raise prices. As we begin 2017, there are two interesting developments which will likely affect the price of oil in the coming weeks and months. The Canadian dollar is sensitive to oil prices, and has gained 2.3 percent in January as crude prices have moved higher. If the reading misses expectations, we could see some volatility from USD/CAD. The markets are expecting the GDP report, the first for the fourth quarter, to post a gain of 2.1 percent. In the US, it’s a busy day, with the release of durable goods orders, UoM Consumer Sentiment and Advance GDP. On the release front, there are no Canadian releases for the remainder of the week. USD/CAD has edged higher in the Friday session, as the pair slightly above the 1.31 line.
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