A panel of experts says it’s unlikely a dramatic improvement in western Canadian oil prices since Alberta Premier Rachel Notley announced production curtailments on Dec. 2 will continue after the cuts begin on Jan. 1.
The difference between Western Canadian Select bitumen-blend heavy oil and New York-traded West Texas Intermediate oil prices had widened to as much as US$52 a barrel in October and hovered at about US$25.50 on Dec. 3.
Calgary trading company Net Energy says the differential tightened to as little as US$10.25 on Tuesday this week and was flat at US$12.25 on Thursday for barrels to be delivered in January.
Grant Bishop, associate director of research for the C.D. Howe Institute, says current prices are based on speculation about what the market will look like in January and that will change after curtailments actually begin.
Speaking after a panel discussion on the topic in downtown Calgary, he and panellist Trevor Tombe, assistant economics professor at the University of Calgary’s School of Public Policy, pointed out the province’s goal is for a modest US$4 per barrel improvement in 2019.
Audience member Gordon Tulk argued that the province has surrendered to pipeline opponents by reducing production and will be forced to extend cuts because the fundamental problem of not enough market access for oil will persist beyond the program’s end date at Dec. 31, 2019.
But the panellists disagreed, with Kent Fellows, research associate in energy and environmental policy at the School of Public Policy, noting that new pipelines will eventually be built to restore market normalcy.