The cost to fuel up at the pump is expected to rise in the coming days, possibly returning to the higher prices seen in late-November and early-December.
Gas prices in Metro Vancouver have hovered near the $1 per litre mark for the past three weeks, but on Friday the price took an upswing from $1.026 per litre and has reached $1.109 per litre on Monday.
This coincides with a rebound in crude oil markets after more than half a year of consecutive losses which reached a six year low. Over the past three days, Brent crude oil surged from US$49 to US$54.97 per barrel while West Texas Intermediate crude climbed from US$44 to US$49.97. In contrast, eight months ago these oil prices were more than double the recent lows.
The recovery in the price comes after news that producers are taking further action to address global oversupply issues. More than 90 American-controlled oil rigs were idled, meaning the rig count is now at 1,543 – the lowest in five years.
The Canadian dollar also responded positively to the oil market changes, increasing by 0.84 of a cent to reach US$0.7951.
However, analysts say the the oversupply problems are far from being resolved and the oil price has not yet found a bottom. The price increase in gas over the coming days could merely be temporary.
According to the Wall Street Journal, “the recent rallies are largely technical in nature with traders cashing in on bets that prices will fall further. Global growth, the main factor that could help on the demand side, remains wobbly at best.” Furthermore, there is still an overproduction of about two million barrels per day.
Bloomberg News also warns that the Canadian dollar could sink to a low of $US0.69 with further drops in oil price expected.
Feature Image: Gas pump via Shutterstock