Oil prices are known to be volatile and 2023 was no exception. 

The average price of a barrel of West Texas Intermediate (WTI) crude oil at the start of 2023 was $78/bbl in January buoyed by optimism around rising fuel demand in the US.

Shortly after, fears started creeping up due to multiple bank failures and persistent inflation in the US economy. WTI plummeted to a low of $66/bbl around mid-March. This was, however, short lived as support from announcements on production cuts by OPEC+ members pushed prices soaring past $80/bbl by early April.

The drama was nowhere close to being over as larger cuts announced by Saudi Arabia and Russia along with reports of rising US demand pushed the monthly oil price to US$89/bbl in September, the highest in over a year.

Since then, prices have moderated to an average of $72/bbl in December under growing concerns of the ability of OPEC+ members to successfully implement its pledged 2.2 million barrels per day supply cut while the world economy continues to grapple with a higher interest rate environment. WTI closed at $71.7/bbl on the last trading day of the year. 

In our December forecast, WTI oil prices are expected to average $79/bbl this year as the market rebalances amid OPEC+ cuts and slower demand growth. This is similar to the U.S. Energy Information Administration’s latest forecast of $78/bbl for 2024.

Answer to the previous trivia question: The last time the Bank of Canada’s policy interest rate was higher than its current 5% was in February 2001 when it was 5.5%.

Today’s trivia question: 2024 marks the 75th anniversary of which province joining Confederation?