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Energy experts say U.S. oil producers will likely be the first to cut output should the global crude price continue to languish below US$60 per barrel, but their Canadian peers should be able to keep chugging along.
West Texas Intermediate, the key U.S. light oil benchmark, settled at US$56.53 per barrel on Friday, the lowest the price has been since early 2021.
Rory Johnston, founder of the Commodity Context newsletter, says unlike during the thick of the COVID-19 pandemic, economic woes are not dragging down fuel demand this time.
He says there’s just too much oil on the market as the Organization of Petroleum Exporting Countries unwinds earlier production cuts and new sources of supply come onstream.
Al Salazar, head of macro oil and gas research at Enverus, says Canadian producers have been “battle tested” by past downturns and they’re resilient thanks to efficiency improvements they’ve made.
He and Johnston agree that U.S. shale oil players, which have relatively high costs, will be the first to blink in the face of the weak prices and cut back their production.
Lauren Krugel, The Canadian Press
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