• 3 minutes China has *Already* Lost the Trade War. Meantime, the U.S. Might Sanction China’s Largest Oil Company
  • 7 minutes Saudi and UAE pressure to get US support for Oil quotas is reportedly on..
  • 11 minutes China devalues currency to lower prices to address new tariffs. But doesn't help. Here is why. . . .
  • 15 minutes What is your current outlook as a day trader for WTI
  • 3 hours Domino Effect: Rashida Tlaib Rejects Israel's Offer For 'Humanitarian' Visit To West Bank
  • 14 hours Will Uncle Sam Step Up and Cut Production
  • 2 days Movie Script: Epstein Guards Suspected Of Falsifying Logs
  • 20 hours In The Bright Of New Administration Rules: Immigrants as Economic Contributors
  • 16 hours Trump vs. Xi Trade Battle, Running Commentary from Conservative Tree House
  • 3 hours Continental Resource's Hamm (Trump Buddy) wants shale to cut production.Can't compete with peers. Stock will drop in half again.
  • 3 hours Gretta Thunbergs zero carbon voyage carbon foot print of carbon fibre manufacture
  • 1 day Significant: Boeing Delays Delivery Of Ultra-Long-Range Version Of 777X
  • 12 hours NATGAS, LNG, Technology, benefits etc , cleaner global energy fuel
  • 2 days I think I might be wrong about a 2020 shakeout
  • 2 days Kremlin Says WTO's Existence Would Be In Doubt If the U.S., Others Left
  • 52 days To be(lieve) or Not To be(lieve): U.S. Treasury Secretary Says U.S.-China Trade Deal Is 90% Done
  • 2 days Why Oil is Falling (including conspiracy theories and other fun stuff)

Alberta Further Relaxes Oil Production Cut

Rail sunset

With Canadian crude oil prices climbing higher, the Alberta government loosened the production cut imposed at the beginning of January by 100,000 bpd and has plans to further relax it next month. This month, local producers can extract 3.66 million bpd of heavy crude.

“A short-term production limit is not ideal or sustainable, which is exactly why we have a plan to move more oil by rail in the coming months while we fight for the long-term solution of building pipelines to new markets,” Premier Rachel Notley said, also acknowledging that the cuts had served their purpose: “The decision to temporarily limit production was applied fairly and equitably, and our plan is working to stop allowing our resource to be sold for pennies on the dollar.”

However, the lower cuts of 95,000 bpd that Notley announced in December will likely stay in place as planned until the end of the year. The purpose of the initial, higher cuts, of 325,000 bpd, was to reduce the inventory overhang, which has now fallen to a more manageable level and the discount of Western Canadian Crude to West Texas Intermediate has narrowed substantially. Last year, the discount at one point exceeded US$50 a barrel. Now, it is in the single digits.

This latter fact, however, has had some analysts worried that refiners will start seeking cheaper alternatives to Canadian crude. What’s more, one Scotiabank analyst said the production cut had already affected the profitability of oil-by-rail transportation in a negative way and the discount had to widen again to make this way of transporting crude profitable again.

"The curtailment has either taken initially too much oil or took it off the market too quickly," Rory Johnston told CBC this week. Alberta’s government, pressed for oil transport capacity, earlier announced it would buy 4,400 rail cars to ship more oil by rail as new pipelines have yet to be built if at all.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play