Varcoe: As Trump and OPEC leader come to Alberta, energy markets 'hanging on their words'

Calgary Herald

a day ago

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Amid such turbulence, clarity remains in short order and is clouding investment decisions.
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That's why energy experts will closely scrutinize next month's visits, including the speech in Calgary by Al Ghais, a former Kuwaiti governor to the Organization of Petroleum Exporting Countries.
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'It doesn't really seem like the market is exactly sure what to make of what OPEC is doing right now, (with) a lot of contradictory signals and a lot of confusion,' Rory Johnston, founder of the Commodity Context newsletter, said Thursday.
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'Anytime the secretary general speaks over the next little while, the market is watching to try to figure out what all this means. Obviously, for a Canadian audience, that is especially acute given the fact that we like high prices here.'
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Oil is Canada's largest export item, but high prices have been missing since March, when WTI crude hovered near US$72 a barrel. Many analysts expect weak prices will continue through 2025 and into next year.
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The tandem of U.S. 'reciprocal tariffs' unveiled against other countries on April 2 and OPEC+ agreeing to increase its oil supply led to a sharp drop in prices through much of the spring. On Thursday, WTI crude closed at US$60.90 a barrel, down 90 cents on the day.
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The provincial government is projecting oil prices will average $68 a barrel for its fiscal year, potentially creating a massive revenue shortfall for the province if tepid prices continue.
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Rystad Energy is forecasting benchmark U.S. oil prices will average $66 a barrel for this year, and $69 next year, if OPEC+ take steps to cut supply to support markets, as it has done in the past.
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However, if the cartel and its allies don't take such action, WTI crude prices could be in the mid US$50-a-barrel range next year, said Bell.
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'Without OPEC coming back in to manage the market later on in this year, we do run the risk of being in a fairly low crude oil price environment,' Bell said.
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'There is a little bit of upside on WTI prices for the summer months, but I think over the rest of 2025, we're going to be in that low $60s range, which does make it challenging from an Alberta budget perspective.'
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During a presentation at a conference Wednesday, she noted oil markets are facing structural changes from a shifting world order, with U.S. tariffs at a level not seen in decades.
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Rystad has cut expected global oil demand this year by 400,000 barrels per day because of the direct impact of tariffs.
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In Canada, however, some of the hit will be offset by a smaller discount facing heavy oil.
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The price differential between WTI and Western Canadian Select heavy oil has narrowed to about $10 a barrel with the startup of the Trans Mountain pipeline expansion, which has opened up new markets for producers.