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(Bloomberg) -- The deluge of Canadian oil that’s adding to a global glut and driving prices lower is showing few signs of slowing.
Even with crude down 52 percent since June, output will grow 3.5 percent this year from the world’s fifth-biggest producer. The Canadian dollar is near a six-year low and materials cost less, helping oil sands producers cut costs and keep pumping. Oil would have to stay between $30 and $35 a barrel for at least six months, down from about $50 now, before wells and mines are shut, according to the Canadian Energy Research Institute.
Surging North American production has contributed to a global glut, pushing U.S. supply to the highest in three decades. OPEC opted in November to maintain output to hold on to market share. Oil sands supply is growing even as the number of rigs drilling for oil in the U.S. has fallen to the lowest in almost four years. RBC Dominion Securities estimates that oil companies have cut $86 billion from spending plans.
“We are above the price where existing projects” get shut down, Robert Johnston, chief executive officer of risk consultants Eurasia Group, said in Calgary Feb. 4. “Even projects that are under construction will continue.”
Western Canadian Select, the heavy crude that serves as the benchmark for oil sands, traded at $37.10 a barrel, according to data compiled by Bloomberg. It was $13.50 below West Texas Intermediate, the U.S. benchmark.
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Canadian Oil Sands Output Growth Defies Plunge in Prices: Energy - Bloomberg Business
(Bloomberg) -- The deluge of Canadian oil that’s adding to a global glut and driving prices lower is showing few signs of slowing.
Even with crude down 52 percent since June, output will grow 3.5 percent this year from the world’s fifth-biggest producer. The Canadian dollar is near a six-year low and materials cost less, helping oil sands producers cut costs and keep pumping. Oil would have to stay between $30 and $35 a barrel for at least six months, down from about $50 now, before wells and mines are shut, according to the Canadian Energy Research Institute.
Surging North American production has contributed to a global glut, pushing U.S. supply to the highest in three decades. OPEC opted in November to maintain output to hold on to market share. Oil sands supply is growing even as the number of rigs drilling for oil in the U.S. has fallen to the lowest in almost four years. RBC Dominion Securities estimates that oil companies have cut $86 billion from spending plans.
“We are above the price where existing projects” get shut down, Robert Johnston, chief executive officer of risk consultants Eurasia Group, said in Calgary Feb. 4. “Even projects that are under construction will continue.”
Western Canadian Select, the heavy crude that serves as the benchmark for oil sands, traded at $37.10 a barrel, according to data compiled by Bloomberg. It was $13.50 below West Texas Intermediate, the U.S. benchmark.
more
Canadian Oil Sands Output Growth Defies Plunge in Prices: Energy - Bloomberg Business
