Canada’s oilpatch is bracing for the impact of plunging crude prices after OPEC and its allies failed to reach a deal aimed at cutting production as economies slow because of the novel coronavirus.
Canada’s oilpatch is bracing for the impact of plunging crude prices after OPEC and its allies failed to reach a deal aimed at cutting production as economies slow because of the novel coronavirus.
Prices began sliding after Russia refused to support deeper oil cuts to cope with the outbreak of coronavirus and OPEC responded by removing all limits on its own production.
Brent crude, the global oil benchmark price, had its biggest daily percentage loss in more than 11 years on Friday, down $4.72 US, or 9.4 per cent, to settle at $45.27 US a barrel.
The benchmark crude contract in North America, West Texas Intermediate (WTI), closed down 10 per cent on Friday, dropping $4.62 to $41.28 US per barrel. It was its worst drop in more than five years.
Brent and WTI are both down over 30 per cent so far in 2020.
‘Not good for governments reliant on oil revenues’
COVID-19 concerns and the impact on oil demand — plus the prospect of OPEC abandoning its role in trying to limit supplies — have the makings of a “toxic recipe” for oil prices, said Judith Dwarkin, chief economist at RS Energy Group.
“That’s not good for oil producers; it’s not good for governments reliant on oil revenues,” Dwarkin said.
“It’s generally not good for the Canadian economy, for which oil production and all the taxes and royalties