Oil prices are notoriously volatile, but enough time has passed since the record-breaking dive they took in April to say that they have—at least for now—stabilized around the US$40 per barrel mark (see the chart below).

The path oil prices have followed this year is similar to that of the economy overall, albeit exacerbated by the oil price war that erupted between Russia and Saudi Arabia in March just days before COVID-19 was declared a pandemic by the World Health Organization.

Prices fell dramatically in the spring, climbed as the economy reopened, have reached a level that staves off disaster, but are still below where they were before the pandemic and are resting on a precarious foundation of production cuts and a wobbly global economy.

With the West Texas Intermediate benchmark trading around $40, Alberta’s oil industry can hang on, but prices in the $50 to $60 range and a return to pre-pandemic production levels are needed before the true healing can begin.

In the meantime, the capital investment, direct and indirect jobs and government revenue generated by the oil sector in Alberta will remain stunted.