‹ Oil & Gas

Giving the stuff away

December 20, 2012

Canadian crude prices are at their lowest levels against Brent-priced crude in 10 months, reaching a new market low and trading last week at under $50/barrel.

There are three reasons for low Canadian crude prices, according to Jen Alic of OilPrice.com:

Alberta’s Energy Minister has stated that the lower prices cost provincial producers $2.5 B/month.



The inability of producers to realize the best price for the commodity puts a damper on investor returns and incentives to invest. The current price of $90/barrel (WTI) is likely to fall. The US government’s Energy Information Administration suggests $88 /barrel oil (WTI) in 2013, while Forbes Magazine suggests $78/barrel.

The oil sands is a high cost play. Lower oil prices and constrained pipeline capacity are making the case for oil sands investments increasingly difficult.