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Monday, December 14, 2015 - Price causes oil extraction to fall

Nick Ford • Economist

December 14, 2015

Price causes oil extraction to fall

After an all-time high in August, the latest oil supply and disposition figures reveal that Alberta’s oil producers were far less busy in September.
 
Oil extraction in our province dropped by 17.1 million barrels (-16.5 per cent) from August to September. Despite the hefty fall in extraction, crude withdrawals were at virtually the same levels seen a year ago when oil averaged around $US 93 (WTI).
 
Oil exports from our province remained unchanged from August to September; about 83 million barrels of oil left our province in September. The good news story about our oil exports is the fact that they’re still up by about 16 per cent from last year.
 
The low price of oil was likely the determining factor for the drop in crude withdrawn. The average price for a barrel of West Texas Intermediate oil was $US 45, well below the break even point for many of our province’s producers.
 
As prices continue to stay suppressed (currently around $US 35 per barrel, WTI) and demand for oil remains low, it will be some time before we see oil reach appetizing levels that signal a surge in extraction.

posted in General at Mon, 14 Dec 2015 09:07:51 -0700



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