Oil production down in April
As of April, total crude oil and equivalent production in Alberta was down 13 per cent compared to the year before.
By ATB Economics 22 June 2020 1 min read
The amount of crude produced in Alberta has gone up every year since at least 2010 with only one exception—forest fires pushed production down by 0.9 per cent in 2016.
As with so many other things, the COVID-19 pandemic has upset this long standing pattern. Demand destruction brought on by efforts to contain the pandemic combined with a disastrously timed oil price war between Saudi Arabia and Russia caused oil prices to collapse in April. This, in turn, forced many Alberta oil producers to reduce their output.
As of April, total crude oil and equivalent production in Alberta was down 13 per cent compared to the year before. Compared to February 2020, April’s output was down by about 561,000 barrels per day. It’s estimated that the production cuts have since increased to around one million barrels per day.
The drop in production and the lower prices are reflected in our trade performance with Alberta’s international exports of crude oil down by 40 per cent in April ($2.3 billion) compared to February.
If prices continue to improve, global supply is kept in check and a second wave of the pandemic does not push down demand once again, we should see production levels climb up over the second half of the year.
The bright side in this is that oil prices—including for Western Canadian Select—have at least improved since April. The problem is that they remain soft and rest on production cuts rather than strong demand.