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Canadian Oil Crisis Continues

Canadian Oil Crisis ContinuesCanadian Oil Crisis Continues

Canadian oil producers are once again suffering from a steep discount for their oil, causing the largest spread between Canadian oil and WTI in years. Western Canada Select recently fell below $40 per barrel, dropping to as low as $38 per barrel on Tuesday. That put it roughly $31 per barrel below WTI, the largest discount since 2013, RT reported. The sharp decline in WCS prices is a reflection of a shortage of pipeline capacity. Much of the talk about pipeline bottlenecks these days focuses on the Permian Basin and the unfolding slowdown in shale drilling, which could curtail US oil production growth. But Canada’s oil industry was contending with an inability to build new pipeline infrastructure long before Texas shale drillers. However, the problem has grown more acute over the last 12 months. Even as pipeline takeaway capacity has not budged, Canadian oil production continues to rise. Output could jump by around 230,000 barrels per day in 2018, followed by another 265,000-bpd increase in 2019, according to the International Energy Agency.

 

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