A crude game of snakes and ladders
Oil prices to April 2023
By Rob Roach, ATB Economics 3 May 2023 1 min read
If you have played snakes and ladders, you have a good sense of how oil prices change over time.
The average price of the West Texas Intermediate (WTI) crude oil benchmark in April 2023 was US$79.44 per barrel.
This was 22% lower than in April 2022 and 29% higher than in April 2021.
Over the first four months of 2023, the daily price of WTI closed as high as US$83.26 per barrel and as low as US$66.74.
These price swings are typical of life in the oil industry.
On the bright side, with WTI averaging just shy of US$77 so far this year (and the Western Canadian Select benchmark averaging a little under US$60), the price environment is generally friendly for Alberta’s oil patch.
Also on the bright side is the fact that tight global supply and demand dynamics (assuming OPEC+ does not change its mind about keeping a lid on its production) have prevented a major slide in 2023.
Working against this and a rapid upswing in prices is the general sense that the global economy will be gearing down as tighter monetary policies continue to create speed bumps on the road ahead in 2023.
Demand concerns have contributed to some recent weakness in WTI, with yesterday’s closing price down to US$71.76. If the global slowdown is worse than expected, oil prices could move even lower.
On the other hand, the war in Ukraine continues to present the possibility of a sudden price spike.
Answer to the previous trivia question: “Producing a good or service at a lower opportunity cost than other producers” is known as comparative advantage.
Today’s trivia question: What board game originated in ancient India as Moksha Patam?