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Oil prices firm under $US 50

Oil prices firm under $US 50

Posted on: 8/23/2017 | Author: ATB Financial's Economics + Research Team

It’s been pretty quiet in oil markets lately. Even so, The Owl likes to check in every once in a while to offer an update.

For the last couple of weeks, the North American benchmark, West Texas Intermediate (WTI) price has been stable but stuck in neutral at around $48 (US) per barrel. That’s because basic oversupply concerns and weaker demand fundamentals continue to weigh on oil’s price.

The Canadian benchmark, Western Canadian Select (WCS) has also held steady recently, averaging around $38 (US) per barrel. The price differential (the difference between the WTI and WCS) has also held firm around $10-11 (US) as of late.

Greater US production levels have been a major factor in keeping global supply levels from pushing higher. Even though there has been evidence of draws on supply over the last month, these may not be enough to offset the oil that’s being added to market. That means oil prices are likely to stay under $US 50 at least for the rest of the year.

The fact that oil prices haven’t fallen from last year is good news for oil producers in our province, even if the current price isn’t as lucrative as many producers would like. Companies have adapted over the last couple of years, however, so the current price environment isn’t as troublesome as it once was.

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