OPEC Deal Announced

After a week fraught with concerns that the gaps between certain OPEC members were too wide to bridge, the news of a plan to cut 1.200 million barrels of production to help offset the ongoing supply imbalance was enough to send oil prices surging higher by near double digit rates.  The deal, which is set to take effect January 1^st, sees the biggest cuts shouldered by Iraq and Saudi Arabia while Libya and Nigeria were granted exemptions.  Adding to the optimism was news that Russia plans to participate by reducing output up to 300,000 barrels per day in the first half of 2017.  To ensure compliance, Kuwait, Algeria, and Venezuela are set to monitor the deal to make sure quotas are not exceeded.  WTI are currently flirting with the $50.00 level after failing to cross the level on Wednesday.

Mirroring the upward momentum in oil prices, the Canadian economy showed vast improvements over the last few months, with gross domestic product climbing by 0.30% during September.  On an annualized basis, the results translate to a 3.50% annualized pace of growth for the economy, well exceeding the -1.30% contraction reported a quarter earlier.  GDP expansion has now reached a two-year high of 0.90% during the third quarter, highlighting the ongoing fundamental recovery’s ferocity.  Helped along by accommodative monetary and fiscal policy, the key drivers were a rebound in exports, namely from the oil and gas sector as the country recovers from wildfires that tore through the oil patch early in the summer.  After trading mostly flat on Wednesday, positive momentum in oil prices is seeing the Canadian dollar appreciate versus the US dollar, pushing USDCAD back below 1.3400.