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Calgary Herald
3 days ago
- Business
- Calgary Herald
Varcoe: As Trump and OPEC leader come to Alberta, energy markets 'hanging on their words'
Article content Amid such turbulence, clarity remains in short order and is clouding investment decisions. Article content 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. Article content '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. Article content '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.' Article content 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. Article content Article content 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. Article content 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. Article content 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. Article content 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. Article content '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. Article content Article content '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.' Article content 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. Article content Rystad has cut expected global oil demand this year by 400,000 barrels per day because of the direct impact of tariffs. Article content In Canada, however, some of the hit will be offset by a smaller discount facing heavy oil. Article content 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.
Calgary Herald
3 days ago
- Business
- Calgary Herald
Varcoe: As Trump and OPEC come to Alberta, energy markets 'hanging on their words'
Article content Amid such turbulence, clarity remains in short order and is clouding investment decisions. Article content 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. Article content Article content '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. Article content '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.' Article content 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. Article content Article content 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. Article content 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. Article content 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. Article content 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. Article content '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. Article content Article content '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.' Article content 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. Article content Rystad has cut expected global oil demand this year by 400,000 barrels per day because of the direct impact of tariffs. Article content In Canada, however, some of the hit will be offset by a smaller discount facing heavy oil. Article content 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. Article content Meanwhile, the outlook for natural gas producers in Western Canada is looking up with the impending startup of LNG Canada, which will export about 1.8 billion cubic feet (bcf) per day to customers in Asia.
Time of India
22-05-2025
- Business
- Time of India
How Trump's trade war is transforming Canada's oil exports to China?
If there is a law of unintended consequences, then a good example is how commodity markets are adjusting to both the realities and the perceived threats of the tariff war launched by U.S. President Donald Trump . Trump's trade and tariff measures have forced commodity producers, traders and buyers to re-think long-established relationships, adapt to emerging realities and try to predict what may happen. What is becoming clear is that commodity markets are adjusting not only to actual measures imposed by the Trump administration, but also to the possibility of future actions, which has created a desire to limit exposure to the United States. Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Never Throw Away the Water After Boiling Eggs - The Reason is Genius! Tips and Tricks Undo An example of this is seaborne exports of crude oil from Canada, which have shifted away from the United States and towards China, even though Trump backed away from his initial plan to impose a 10% tariff on energy imports from Canada. For the first time ever Canada exported more seaborne crude to China in April than it did to the United States, showing how market dynamics can move amid the uncertainty created by Trump's trade war. Live Events Canada's seaborne exports of crude to China were 299,000 barrels per day (bpd) in April, up from 277,000 bpd in March, according to data compiled by commodity analysts Kpler. Seaborne shipments to the United States were 286,000 bpd in April, roughly in line with March's 283,000 bpd but down from the record of 431,000 bpd in September last year. To be sure, the above numbers reflect only oil moved by vessels and don't account for the far larger flows of Canadian crude into the United States via pipeline and rail. Canada sends about 4 million bpd of crude to its southern neighbour via pipelines, and while the volumes have been steady, prices have shifted in Canada's favour, reflecting another unintended consequence of Trump's often chaotic policies. The discount of Western Canadian Select crude to U.S. West Texas Intermediate has narrowed to the lowest in about 4-1/2 years at just over $9 a barrel, dropping from levels closer to $30 as recently as November. This reflects another dynamic that Trump probably didn't expect, as his sanctions on Venezuelan oil, which like Canadian crude is heavy, reduced the amount of this grade available to U.S. refiners. This means that Canadian crude is more in demand in the United States, and U.S. refiners are having to pay more. The rising price for Canadian crude brings into question the view that Canada was far more dependent on the United States than vice versa. It now seems that the United States is actually quite dependent on Canadian crude, especially if Trump has limited the suitable alternatives with sanctions. SEABORNE SHIFT The advantage also seems to be with Canada when it comes to seaborne exports. Canada has lifted its seaborne crude exports since the Trans Mountain pipeline expansion came on line in May last year, which increased its capacity to 890,000 bpd. It has been expected that the bulk of this oil would be shipped to refiners on the U.S. West Coast, and initially that is how it played out. But once Trump returned to the White House in late January and upped both his rhetoric and actions against his northern neighbour and erstwhile close ally, Canada's seaborne oil flows have shifted. Even though Trump backed down on imposing any tariff on energy imports from Canada, the damage has largely been done, with Canadian oil producers keen to develop alternative markets. Hence the interest in China, the world's biggest oil importer, which has also been keen to increase the diversity of its suppliers in a bid to lessen its dependence on oil from the OPEC+ group of exporters. China has also effectively halted importing crude from the United States amid the escalation in tariffs imposed by Washington and Beijing since Trump's return. While those tariffs have been lowered for a 90-day period to allow for talks, China is still imposing a 10% levy on U.S. oil imports, which is high enough to render U.S. oil uncompetitive in China. No U.S. crude is scheduled to arrive in China in May and June, according to Kpler, while as recently as June last year China imported 417,000 bpd from the United States. It's not that China is replacing U.S. crude with Canadian, as they are different grades. It's that China is being dynamic in its oil trade, and is finding willing partners such as Canada. (The views expressed here are those of the author, a columnist for Reuters.)
Calgary Herald
02-05-2025
- Business
- Calgary Herald
Ottawa may not want to get out of the pipeline business just yet: Trans Mountain CEO
Ottawa has long said it intends to sell its $34-billion Trans Mountain pipeline to the West Coast, but the head of the Crown corporation that owns it says the federal government may not want to get out of the pipeline business just yet, particularly if it decides it shouldn't be the last oil export pipeline built in Canada. Article content 'If there is another pipeline to be built, and private capital won't do it, with Trans Mountain, (Ottawa) can ring the bell and say, 'You guys get this done,'' Trans Mountain Corp. chief executive Mark Maki said. Article content Article content But he said he didn't know if the new government under Prime Minister Mark Carney would deviate from previous plans to sell the Crown corporation that owns and operates the expanded 890,000-barrel-per-day pipeline, which just finished its first full year of operations. Article content Article content 'It's very possible. We're going to have to see. But taking (Carney's) words at face value, the desire to have Canada be an energy superpower, for sure (it's possible),' he said. 'Canada does have a big, natural resource-based economy, so we should take advantage of that and Trans Mountain can be a piece of that if the government wants it to be.' Article content The Trans Mountain expansion (TMX) project took more than a decade to build, and its price ballooned to more than $34 billion from an estimate of $5.4 billion when it was first proposed by Kinder Morgan Inc. in 2013. Article content But as it marks one year of commercial operations this week, TMX's proponents say they finally have the receipts to counter critics who have argued that Ottawa made an expensive mistake when it decided to buy the pipeline project after Kinder Morgan walked away in 2019 — underscored, Maki says, by Canada's now urgent need to diversify its trade away from the United States following President Donald Trump 's economic and annexation threats against Canada. Article content Article content At its startup on May 1, 2024, TMX added 590,000 barrels per day in export capacity and for the first time provided Canada meaningful access to international crude markets, especially Asia, according to a recent analysis by S&P Global Commodity Insights. Article content Article content That access to new markets and the additional pipeline capacity, analysts say, has been key to stabilizing prices for Canada's benchmark heavy crude, Western Canadian Select (WCS), and increasing returns for producers and taxes and royalties for governments. Article content WCS, which is a heavy oil with a higher sulphur content, is considered a lower-quality crude and it trades at a discount to light oils such as West Texas Intermediate (WTI). For much of the previous decade, whenever Canadian production would outstrip export pipeline capacity, there would be a glut of landlocked heavy barrels in Western Canada that would lead to prices cratering. Article content But since TMX entered service early in 2024, the WCS-WTI differential has fluctuated in a relatively tight band between $12.50 and $16.50 per barrel, even as Canadian production has risen to new records, according to S&P Global Commodity Insights, compared to $18/bbl for much of the last decade.
Reuters
08-04-2025
- Business
- Reuters
Keystone oil pipeline shut after spill in North Dakota
Summary Companies Canadian crude oil discount to US oil widened after shutdown South Bow stock tumbled to lowest since October Amount of spill is not known yet, pipeline to be shut until at least Wednesday NEW YORK/HOUSTON, April 8 (Reuters) - The Keystone oil pipeline from Canada to the United States was shut on Tuesday after an oil spill near Fort Ransom, North Dakota, its operator South Bow ( opens new tab and the state's Department of Environmental Quality said. The 4,327-km (2,689-mile) Keystone pipeline is a major conduit for the supply of crude oil from Alberta to U.S. refineries in Illinois, Oklahoma and along the U.S. Gulf Coast. Some U.S. refiners, especially in the Midwest, rely heavily on the type of oil produced in Canada and delivered by Keystone. The Reuters Power Up newsletter provides everything you need to know about the global energy industry. Sign up here. South Bow shut down the pipeline after its leak detection systems detected a pressure drop, a spokesperson said. The amount of oil that leaked from Keystone is unknown, said Bill Suess, a program manager at the North Dakota Department of Environmental Quality. He said he expects the pipeline to be shut until at least Wednesday. South Bow did not provide an estimate of the size of the spill or a timeline for the restart. The company's shares were last down nearly 4% to C$31.99, after hitting their lowest since October at C$30.99 earlier in the session. RBC analysts noted that Keystone's physical integrity is one of the biggest risks for South Bow investors. Oil market participants were bracing for supply disruptions from the shutdown, two crude oil traders told Reuters, requesting anonymity as they are not authorized to speak to the media. The price of Western Canadian Select crude oil fell to a wider discount against U.S. West Texas Intermediate crude. WCS for May delivery traded $11.25 below WTI on Tuesday, compared to a $9.20 discount on Monday, a broker said. At least five prior spills have been reported on Keystone since its start-up in 2010, which took one to three weeks to resolve, said Rory Johnston, energy analyst and founder of the Commodity Context newsletter. The most recent major spill was in December 2022, when around 14,000 barrels leaked in rural Kansas due to an issue that originated during construction of the pipeline. It was the biggest U.S. oil spill since 2013, and shut a portion of the pipeline for 21 days.
