Tuesday, January 27, 2015

A U VS A V MEANS MORE BAD NEWS FOR OIL PRODUCERS


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Oil prices are likely to remain subdued through 
the first half of the year, and follow more of a U-shaped
 recovery pattern than the V-shaped pattern that typically
 follows such sharp price declines,”
- TD BANK FORECAST
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It is all about the demand, supply and price! 

Toronto-Dominion Bank economist Dina Ignjatovic is predicting West Texas Intermediate prices to sink below $40 as bulging inventories weigh on the market in the next few months. 

She is not expecting a sharp bounce in prices with  the U.S. benchmark  averaging just $53 in the second half of the year, and $65 next year! 

The collapse in oil prices has driven prices down by nearly 60 per cent from their peak last June. The impact on this province has severely curbed oil revenues, postponement of some offshore infrastructure expansions and the loss of income for hundreds of Alberta oil-patch workers that make the shuffle out West on lucrative turnarounds.

Alberta based oil producers are slashing their capital spending plans and laying off staff. The down stream impacts are causing job loss losses in the supply and support sectors which in turn is negatively impacting every part of the economy. The Alberta and federal government, like Newfoundland and Labrador are attempting to cope with major reductions in revenues.

The impact of a slow rebound to the $65 mark on this province could be quite significant as displaced migratory workers from rural regions of the province that have become dependent on the Alberta Oil Industry run out of income and savings.

Strap on you seat-belts, this could be a bumpy ride!






1 comment:

Anonymous said...

The province will be out around $1.5 billion in royalties next fiscal year. Combine an existing half billion deficit and you have what amounts to a financial collapse for government. The spinoff impact on the economy will be almost as bad. The "good news" is that we will qualify for federal income support (ie. equalization).