Amid a rise in global crude oil prices in the beginning of the year, the outlook for commodities may finally begin to gain some optimism.
The Petroleum Services Association of Canada (PSAC) has boosted its 2021 drilling forecast by 29%, with the expectation that there will be a total of 3,350 new wells drilled across the country, amounting to an increase of 750 wells from its prior October 2020 forecast. In retrospect, 2020 was a significantly tough year for Canadian oil producers, as the country’s well count fell to a 50-year low of 2,992.
According to PSAC’s latest forecast, the association anticipates that average benchmark US crude oil prices will hover at approximately US$50 per barrel, an increase of 19% compared to prior projections. The forecasts also notes that Alberta natural gas prices are expected to reach C$2.60 per thousand cubic feet in 2021, while the Canadian dollar is expected to remain slightly stronger at $0.79 US.
PSAC Interim CEO Elizabeth Aquin attributes the shift towards positivity for Canada’s oil sector to several federal government programs, including the emergency wage subsidy, and the $1.7 billion abandoned well cleanup program.The new outlook aligns with other signs of optimism for Canada’s struggling oil sector, with the Canadian Association of Petroleum Producers (CAPP) projecting that capital spending will increase by $3.36 billion, to $27.3 billion in 2021.
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Information for this briefing was found via the Canadian Press. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
