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Macro Pulse highlights recent activity and events expected to affect the U.S. economy over the next 24 months. While the review is of the entire U.S. economy its particular focus is on developments affecting the Forest Products industry. Everyone with a stake in any level of the sector can benefit from
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Tuesday, December 6, 2016

November 2016 Monthly Average Crude Oil Price

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The monthly average U.S.-dollar price of West Texas Intermediate (WTI) crude oil retraced October’s gain when falling by $4.30 (8.6%) in November, to $45.48 per barrel. The decrease coincided with a much stronger U.S. dollar, the lagged impacts of a 267,000 barrel-per-day (BPD) drop in the amount of oil supplied/demanded in September (to 19.9 million BPD), and a plateauing of accumulated oil stocks. It is noteworthy that, for the first time since the Great Recession, the year-to-date (through September) average volume of oil supplied/demanded is only on par with the same months in 2000. 
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Prices rocketed higher in early December (+14% by 12/2), in the wake of a surprise November 30 agreement by OPEC intended to cut overall cartel production by 1.2 million barrels per day (BPD)—the first deal to cut output since 2008. Key details of the agreement, which had been assigned only a 30% chance of succeeding, include a Saudi/Gulf Arab reduction of 800,000 BPD and another 90,000 BPD reduction from Russia while allowing Iran to increase output by 90,000 BPD.
For skeptics, the OPEC agreement has the hallmarks of a Hollywood remake. Past cuts have been largely ineffective because “we tend to cheat,” Saudi Oil Minister Ali al-Naimi admitted. “It’s much easier to coordinate an agreement than it is to enforce one,” agreed Troy Vincent, oil analyst at ClipperData, “and if history is any indicator, economic theory and cheating will play out as it always has.”
The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

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