CALGARY – Fears of persistently lower demand for oil are hitting home for industry workers as the world economy slowly strengthens following the deepest disruptions of the COVID-19 crisis.
Oil and gas producer Ovintiv Inc. says it issued layoff notices to some of its 2,600 staff in Canada and the United States starting on Monday.
Director of communications Cindy Hassler says the company, which moved its headquarters from Calgary to Denver last year and changed its name from Encana Corp., will release the number of layoffs on Thursday afternoon.
She says the move is part of a “dynamic response” which includes dramatically lowering activity in the field to address not only the short-term demand destruction and oil price collapse caused by the pandemic but also a feared longer-term slump in demand.
Moody’s Investors Service, meanwhile, warns it expects the disruption to energy markets and enduring behaviour changes caused by the coronavirus crisis may deliver lasting change to energy consumption.
It says in a report that recessionary forces and weaker long-term growth expectations will reduce both corporate and household demand for oil at the same time that consumers embrace increasing use of biofuels, electric vehicles and improved engine efficiency.
“Oil demand may take a long time to recover to 2019 levels due to the combination of weaker economic growth, decarbonization trends and behavioural shifts, increasing the possibility that demand peaked in that year,” said James Leaton, vice-president and senior credit officer at Moody’s.