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Oil production rises in February and March

Oil production rises in February and March

Posted on: 5/2/2019 | Author: ATB Financial's Economics + Research Team

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New numbers from the Alberta Energy Regulator show the amount of oil produced in Alberta was down 7.3 per cent in January 2019 compared to the previous month. Daily oil output decreased in January by about 270,000 barrels, going from 3.68 million barrels per day to 3.41 million barrels per day. The drop in output comes as the result of provincially mandated production limits that came into effect in January.

The limits, designed to improve the price of Alberta crude, were eased in February. As a result, output edged up by 0.8 per cent or about 28,000 barrels a day. This was followed by a 1.0 per cent increase in March that saw production rise by an additional 33,000 barrels per day.

The drop in Alberta’s production in January helps explain the 2.6 per cent dip in the national oil and gas extraction sector’s real GDP that took place that same month, as reported in yesterday’s edition of The Owl.

Although the national oil and gas extraction sector’s GDP slipped again in February by 0.3 per cent, the downward slide seen in January was slowed by the uptick in Alberta’s oil production in February.

We will have to wait for Statistics Canada numbers, but the 1.0 per cent increase in Alberta’s oil production in March should help push the national oil and gas sector’s GDP growth back into positive territory.

The increase in oil production in Alberta is welcome news but it does not mean all is rosy in the province’s oil patch. Production levels are still below where they were at the end of 2018. Adding to that, energy sector spending is tepid and drilling rates are down in the face of transportation constraints, hurting the sector, the workers who rely on it, and the many businesses that supply and service it.

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