Most of Western Canada’s oil production has been restored, according to the Canada Energy Regulator, but U.S. oil producers haven’t had as much luck.
Both countries had to curtail oil production in May due to low oil prices amid the coronavirus pandemic and the oil price war waged by Saudi Arabia and Russia.
The Canada Energy Regulator (CER) now says that about 700,000 barrels of oil production per day has been brought back online after it was forced to cut nearly 1 million barrels per day back in May. The total curtailments as of October now stand at 270,000 bpd.
Last year, Western Canada produced an average of 4.4 million barrels per day.
The oil production rebound tracks oil prices. Western Canadian Select prices were trading around $14 per barrel at the beginning of May but have since more than doubled to $32 per barrel.
Elsewhere in the world, oil production is not rebounding at the same rate. In the United States, oil production fell to 11.5 million bpd in mid-May, down from 13.1 million bpd in March prior to the pandemic and oil price war that tanked prices. U.S. oil production has not yet rebounded, however, and the latest data for the week ending October 16 pegs U.S. oil production at an average of 9.9 million bpd.
In the beginning of May, WTI traded around $22 per barrel. Today, prices have recovered to about $40 per barrel. Still, production is stubbornly low.
There is hope on the horizon, however. Baker Hughes has shown for the last several weeks an increase in the number of new drilling rigs in the United States. The number of rigs actively drilling new wells in the United States rose from 179 in mid-September to 205 in mid-October. That’s the largest four-week increase since the rigs began to drop off.
This rig count movement is a good indication that an increase in production in the United States is in our future.
By Julianne Geiger for Oilprice.com
