Canada Carbon and OPEC Crossroads | April Advisor Preview

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The transitioning price curve of crude oil and refined products in the early parts of 2019 gave way to price stability in March. Combative market dynamics and an overarching level of global uncertainty leave 2019’s fuel market susceptible to frequent volatility, reinforcing the value of holistic energy market knowledge Breakthrough provides to shippers.

In this edition of the Breakthrough Advisor, the Applied Knowledge Team discusses the intricacies of world oil market fundamentals, global economics, and the comprehensive risk environment, along with each variable’s ramifications for your transportation supply chain. Their detailed synopsis of these evolving market influencers helps set the stage for longer-term expectations for the cost of fuel used to move goods to market.

Advisor Preview image featuring Breakthrough logo and yellow truck.

Canada Carbon Mandate

Headlines featuring climate change, emissions reduction, and international policy have gained significant traction internationally. Discussions of the world’s carbon footprint have begun influencing some of the more advanced nations to take a proactive stance against this controversial transition, with Canada considered to be at the forefront of such efforts.

Petroleum products, such as diesel, fall under the umbrella of commodities responsible for carbon emissions. Furthermore, Canada’s development of the Pan Canadian Framework in 2016 kickstarted one of the largest carbon-reduction initiatives in North America to date. But with this proactiveness comes a cost premium that directly impacts transportation energy throughout Canada’s land mass. Provincial compliance with Canada’s carbon-reduction efforts varied by cost mechanism and enforcement since the Pan Canadian Framework came to fruition, albeit April 1 marks the imposition of a federal carbon backstop that will directly impact the cost structure of Canadian fuel products.

What are the actual cost premiums by province? Are any provinces presenting opposition to the government’s mandate? Learn more about the magnitude of said carbon initiatives and find out what these efforts mean for both the current and future energy costs in your Canadian transportation supply chain.

OPEC+ Economic Uncertainty

Some of the world’s largest, most powerful economies and oil producing nations continue to take center stage in terms of their influence on supply and demand of the world’s arguably most vital commodity. The Organization of Petroleum Exporting Countries and supporting nations (OPEC+) have taken more of a “wait and see” approach to their continued production curtailment, as much of the global crude supply-demand balance rests in the hands of the United States, Russia, and Saudi Arabia, and their satisfaction with market conditions. Iranian sanctions remain a topic of vast discussion, along with other market dynamics that could theoretically swing crude oil and diesel prices in either direction. The OPEC+ group is set to discuss the state of the oil market at their meeting in June – a postponement of their initial April meeting – as the Trump Administration’s anticipated decision regarding Iranian waivers at the end of April should assist the cartel in developing its framework for the remainder of 2019.

Additionally, the persistence of US-China trade discussions leaves global leaders optimistic of a bilateral accord, though it remains unclear what tariff structures and their longevity will do to international demand. Other major economies, too, have shown signs of weakness, potentially providing a precursor for the coming demand picture for crude oil and refined products. Learn how the latest demand-related news factors into the holistic energy environment, along with its impact on diesel prices, in the April edition of the Breakthrough Advisor.

This edition of the advisor publication presents a detailed diagnosis of the energy market’s most pressing news and data-driven insights concerning your fuel management strategies. If interested, you can gain further details into ever-changing market dynamics and trending topics by signing up for the Breakthrough Advisor Brief or contacting the Applied Knowledge Team directly.

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