Global oil prices have been in a tailspin since talks broke down between OPEC and Russia–which resulted in increased production from Saudi Arabia and other regions–and the COVID-19 pandemic slowed oil-demand growth. Prices crashed in mid-March, suffering their largest daily decreases since the 1991 Gulf War and falling to their lowest values in recent memory. In this turbulent environment, Canadian producers must be prepared for even leaner times ahead.
Natural gas markets face less uncertainty, since COVID-19 has not lowered demand as significantly as it has with oil. Production growth is expected to slow in the United States, as associated gas volumes will be affected by reduced drilling activity in oil plays. Canadian gas producers have faced lower prices for several years and may be better positioned to weather weakening prices.
In light of these challenges, Deloitte Chief Economist Craig Alexander is forecasting a significant contraction in the Canadian economy: a 0.2 percent decline in real GDP, concentrated in the second quarter. His quarterly economic outlook, Canadian economy battered by global pandemic and oil price slump, has more about what to expect from the global, US, and Canadian economies in 2020. Follow Craig Alexander on LinkedIn for updates and perspectives from the impact of COVID-19.