The fears of a pricing recession led to a sharp drop in crude oil prices, Canadian Walloping energy Stocks and worried people care about the sector’s prospects if weakness persists.
The West Texas intermediate crude, the United States’s reference, dropped as low as US $ 60.45 per barrel on Friday, recovering land at the end of the afternoon to hover around a lower $ 62.
Canadian oil companies are in “waiting-time” mode, said Mark Parsons, chief economist at ATB Financial.
“It’s still early, but it’s something you look at carefully,” he said.
“If these low prices persist, you could shave something from your capital orientations for the year.”
The TSX energy index fell 8.5% at the end of the afternoon one day when the overall Canadian stock market was down approximately 4%.
Parsons said that Canadian oil and gas companies are better able to withstand a potential oil slowdown than when prices cropped in 2015.
“Compared to past cycles, the Alberta petroleum and gas industry is quite thin these days,” he said.
The balance sheets are stronger and the capital is more focused on maintaining operations than extensions of several billion dollars.
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Current pain is also offset by a narrower discount for heavy oil produced in Alberta, in high demand for American refineries in the Midwest and Gulf Coast, compared to a light crude.
Brut oil is the gross product used to make petrol and diesel, so a drop at this cost should possibly go to the consumer.
The Canadian Fuel Association, citing 2023 data from Kalibrate Canada Inc., says crude oil represents around 42% of the price of the pump, with taxes, refining, distribution and marketing composing the rest.
The Gasbuddy.com prices monitoring website said the national average of one liter of regular unleaded gas was 141 cents, a decrease of 12.9 cents compared to a week ago, before the cancellation of the carbon carbon load.
This year’s Alberta budget provides oil prices at US $ 68 per barrel and the provincial government claims that each US $ 1 drop in WTI prices during the year means a blow of $ 750 million for the provincial treasury.
About 90% of Alberta exports go to the United States, and 80% of energy products, Parsons said.
“This gives you a sort of scale of our dependence, not only of this market, but how concentrated this risk for energy.”
Parsons said earlier in the week than fears were centered on us, the “reciprocal” prices hit Canada hard.
Canada has been largely spared the direct impact, but now faces the effects of global economic problems, perhaps demand for crude oil.
“As we know, when other countries with which we exchange … take a cold, we also tend to get sick.”
& Copy 2025 the Canadian press