As North American oil prices slip, stoking worries of a glut in 2026, Canada’s pipeline capacity puts the country in a better position to ride out the low than years prior. Photo by Brett Gundlock /Bloomberg Article content
As North American oil prices remain in the basement — coming close to a five-year low this week — analysts say Canada’s increased pipeline capacity puts the country in a better position to handle the turmoil.
THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLY
Subscribe now to read the latest news in your city and across Canada.
Exclusive articles by David Staples, Keith Gerein and others, Oilers news from Cult of Hockey, Ask EJ Anything features, the Noon News Roundup and Under the Dome newsletters. Unlimited online access to Edmonton Journal and 15 news sites with one account. Edmonton Journal ePaper, an electronic replica of the print edition to view on any device, share and comment on. Daily puzzles, including the New York Times Crossword. Support local journalism. SUBSCRIBE TO UNLOCK MORE ARTICLES
Subscribe now to read the latest news in your city and across Canada.
Exclusive articles by David Staples, Keith Gerein and others, Oilers news from Cult of Hockey, Ask EJ Anything features, the Noon News Roundup and Under the Dome newsletters. Unlimited online access to Edmonton Journal and 15 news sites with one account. Edmonton Journal ePaper, an electronic replica of the print edition to view on any device, share and comment on. Daily puzzles, including the New York Times Crossword. Support local journalism. REGISTER / SIGN IN TO UNLOCK MORE ARTICLES
Create an account or sign in to continue with your reading experience.
Access articles from across Canada with one account. Share your thoughts and join the conversation in the comments. Enjoy additional articles per month. Get email updates from your favourite authors. THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.
Create an account or sign in to continue with your reading experience.
Access articles from across Canada with one account Share your thoughts and join the conversation in the comments Enjoy additional articles per month Get email updates from your favourite authors Sign In or Create an Account or
Article content
“We have sufficient pipeline capacity such that we have much narrower or lower (discounts) for our crude,” Rory Johnston, founder of Commodity Context, said in an interview.
Article content
Article content
Article content
It means that Canada ships its oil to market much more economically than it did before and can bear the impact of lower global prices. The oilpatch can still make money on a barrel of oil even with diminished prices.
Article content
By signing up you consent to receive the above newsletter from Postmedia Network Inc.
Article content
Since the Organization of Petroleum Exporting Countries (OPEC) started releasing more oil into global markets this year, prices have steadily fallen.
Article content
Since July 29, North American oil has been stuck below US$70 per barrel and even dropped to $55.06 on Tuesday — a nearly five-year low. Prices recovered to roughly US$56 a barrel on Wednesday and remained mostly flat on Thursday.
Article content
Johnston said the oilpatch is in a much better position compared to 2018 when there was a similar drop in oil prices that hit the energy sector hard.
Article content
“We had prices crashing through essentially to Boxing Day, and that was around the same time that Canadian Western Canadian Select (discounts) blew to their all-time high,” Johnston said.
Article content
Article content
With prices so low, Canadian companies had to pull back on production because it was costing them too much to ship their oil, and the returns didn’t support it.
Article content
Article content
“The pain was caused by our own lack of doing, if you will, of lack of pipeline construction,” Johnston said.
Article content
Now, with the expanded Trans Mountain pipeline in operation, Canadian oil can hit the market much faster and at a fraction of the cost. The savings may come in handy for what could be a bleak new year for oil prices.
Article content
Jeremy McCrea, managing director of equity research with BMO Capital Markets, said what’s coming is either a glut or a “super glut.” Either way, the concern remains that there’s a lot of supply building in global markets that’s putting pressure on prices.
Article content
“It’s hard to grasp how severe this oil glut is looking to be, but I think for the most part, it is a well-known that there is some concern about how much inventory is starting to build here onshore,” McCrea said.
https://edmontonjournal.com/business/oil-markets-could-be-in-for-super-glut-but-canadas-new-pipeline-access-offers-shelter-from-storm
