Canada’s Trade Deficit Significantly Narrows As Oil Exports Rise

Canada’s merchandise trade deficit narrowed more than expected in December, thanks to a rebound in crude oil exports in the last month of 2019 from the previous month, when a pipeline outage and a railway strike had crippled oil exports.

In December 2019, Canada’s merchandise trade deficit with the world narrowed to US$278 million (C$370 million) from US$903 million (C$1.2 billion) in November, mostly due to higher oil exports, Statistics Canada said on Wednesday.  

The December deficit was one of the smallest deficits Canada has recorded in recent years, and was also lower than expectations, according to Bloomberg.

Exports of energy products posted the largest monthly gain in December, at 9.5 percent, led by an 18-percent jump in crude oil exports, Statistics Canada said, noting that crude oil exports were low in November because of a nearly two-week outage of the Keystone oil pipeline.

At the end of October, the Keystone pipeline was shut down in the wake of a spill of more than 9,000 barrels of oil in North Dakota.  

“As the situation was resolved before the end of November, crude oil exports rebounded strongly in December,” Statistics Canada said today.  

The eight-day strike at the end of November at Canadian National, the biggest railway in Canada, also sent shockwaves through the struggling oil industry, as crude-by-rail shipments from Alberta were nearly halted during the industrial action.  

After dragging on for more than a week and threatening to erase billions of dollars from Canada’s economy, the strike ended on November 26, after the Teamsters Canada trade union and Canadian National reached a tentative agreement to renew the collective agreement for more than 3,000 conductors, trainpersons, and yard workers.

In December, Canada’s exports to the United States increased by 2.9 percent, mainly due to the rebound in crude oil exports, according to Statistics Canada. 

By Tsvetana Paraskova for Oilprice.com

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