The Canadian dollar continues being one of the most active currencies out there. After recovering together with oil prices, it shot higher with them, with a more substantial move: USD/CAD dipped all the way to 1.3947, below the round and important 1.40 as WTI almost touched $35.

But from there, we went back to the drawing board, 1.4050 at the time of writing. What’s going on there?

OPEC is only around a third of global oil production and Saudi Arabia is a third of OPEC. Everybody wants Saudi Arabia to cut production, but are not willing to cut their own within OPEC. The case is the strongest with Iran, that has just come back online from the sanctions and is eager to sell its cheap to produce and accessible oil.

So, in order to cut production in a serious manner and to lift prices, a wider cut would be needed. Russia is a large producer outside OPEC but it is at loggerheads with Saudi Arabia over Syria. Russia supports Asad’s regime, and Saudi Arabia wants him out. And needless to say, there are many other non-OPEC members: fom Oman in the entry to the Persian Gulf, through Norway, Canada and of course the US shale industry that began the fall in prices.

However, reports about coordination between Saudi Arabia and Russia about cutting 5% of their production was already news: WTI shot higher around 10% and got close to $35. USD/CAD fell under $40.

Yet when Iran said it’s not part of the game, it seemed like just another short squeeze. I must say kudos to Dale Pinkert on the Live Analysis room for talking about a short squeeze towards $35. And that’s what happened.

And a squeeze cannot last too long: there is still too much oil sloshing around: rising inventories, countries wanting others to stop producing and just not enough demand: India cannot fill the void that the Chinese slowdown leaves.

So, we’re back down again for crude oil to the $33 handle up above 1.40 on Dollar/CAD.

The roller-coaster is set to continue. The headline grabbing numbers of $20 or even $20 for crude are a bit far out, but a drop back under $30 certainly cannot be ruled out until we get production down by agreement or by economic force, or with a rise in demand, which will take more time.

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