Newspaper article The Canadian Press

Western Oil Price Rally Unlikely to Last after Curtailments Begin: Expert Panel

Newspaper article The Canadian Press

Western Oil Price Rally Unlikely to Last after Curtailments Begin: Expert Panel

Article excerpt

WCS oil price rally unlikely to last: panel

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CALGARY - It's unlikely a dramatic improvement in western Canadian oil prices since Alberta announced forced production curtailments two weeks ago will continue after the cuts begin on Jan. 1, a panel of experts agreed Thursday.

The difference between Western Canadian Select bitumen-blend heavy oil and New York-traded West Texas Intermediate oil prices had widened to as much as US$52 a barrel in October before recovering to about US$25.50 on Dec. 3, the day after the announcement by Alberta Premier Rachel Notley.

The differential tightened to as little as US$10.25 on Tuesday this week and was flat at US$12.25 on Thursday for barrels to be delivered in January, according to Calgary trader Net Energy.

That's actually slightly lower than what analysts consider a normal or typical discount based on transportation costs and the difference in quality between WCS and WTI.

"I expect there's going to be a lot of variance in the short-term over the next couple of months where the price bumps around trying to seek what its natural level should be," said Kent Fellows, research associate in energy and environmental policy at the University of Calgary's School of Public Policy, after a panel discussion on the topic in downtown Calgary.

"I would not expect the differential to stay as low as it was on Tuesday."

Audience member Gordon Tulk argued that Alberta has surrendered to pipeline opponents by reducing production and will be forced to extend cuts beyond the program's end date because the federal government's Bill C-69 to revamp the National Energy Board will make it impossible to build new pipelines.

"We are surrendering to the federal government and the powers that are pushing the federal government politically," he said later, adding the curtailments amount to the province "kneecapping" its own industry. …

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