Page 8 - NorthAmOil Week 11

NorthAmOil PERFORMANCE NorthAmOil
Oil price falls below breakeven point for Canadian producers
The board has suggested the economy could
start rebounding in the fourth quarter dur-
ing 2021 – with oil prices projected to top $50
per barrel again by this point. But this remains
uncertain while it is unknown how long the oil Justin Trudeau price war and coronavirus outbreak will last.
Even over the past week, the impact of the lat-
est price crash on Canada’s oil industry has been
dramatic. According to Laurentian Bank Secu-
rities oil and gas research analyst, Todd Kepler,
Canadian companies have eliminated an esti-
mated CAD3.5bn ($2.4bn) in capital expendi- package to help tures over the past week alone.
Canadian Prime Minister Justin Trudeau has unveiled a CAD82bn ($56.6bn) fiscal package to help the country weather the impact of the coro- navirus outbreak. The package, which includes measures to keep employees on payrolls, has been welcomed by oil and gas companies. Despite this providing some breathing room, however, the country’s oil industry is looking at a situation that is expected to get worse before it gets better.™
Concerns about
flying workers in
have led Syncrude Canada to delay coker maintenance at its upgrader.
CANADA
CANADA’S already battered energy industry is taking another hit as oil prices tumble to new lows. On March 18, the price of Western Cana- dian Select (WCS) fell 37% during intraday trad- ing, and traded below $10 per barrel for the first time.
The increasingly bearish outlook for oil prices amid weak demand and an ever-worsening sup- ply glut has led to questions about the Cana- dian oil industry’s ability to survive the latest headwinds.
Canadian crude prices dropped below $8 per barrel, while West Texas Intermediate (WTI) dipped below $22 per barrel. An IHS Markit oil analyst, Kevin Birn, was cited by the Finan- cial Post as saying that both prices were below the breakeven point for nearly all Canadian producers.
Meanwhile the measures being taken to con- tain the spreading coronavirus outbreak are also hitting Canada’s oil industry. Concerns about flying workers in have led Syncrude Canada to delay coker maintenance at its upgrader and Suncor Energy to delay planned work that had been scheduled for May. As a result, synthetic crude that was not previously expected to be entering the market will continue to flow, adding further downward pressure on oil prices.
This week, the Conference Board of Can- ada warned in its spring outlook report that the combination of the coronavirus crisis and the oil price war between Russia and Saudi Arabia could put their country “on the brink of recession”.
“After slowing to end the year, economic growth has been weak in the first quarter and is expected to contract in the second quarter to 2.7%,” the Conference Board’s report said. It
added that it expected growth to resume in the third quarter of this year. However, it also sug- gested that any economic turnaround in Alberta was unlikely for the remainder of the year.
The board’s director of national forecasts, Matthew Stewart, said he projected zero growth in Alberta for this year, with the province remaining in recession. The board’s previous forecast had Alberta growing by 2.2% after a 0.5% decline last year.
“Alberta was going to be one of the growth leaders, really driven by the pickup in exports. All that’s gone now, so we’re seeing growth, basi- cally 100 per cent evaporate in 2020,” he said.
Canadian Prime Minister
has unveiled a CAD82bn ($56.6bn) fiscal
the country.
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w w w . N E W S B A S E . c o m Week 11 19•March•2020