Production of crude oil and equivalent products rose 1.9 per cent to 24.1 million cubic metres (151.6 million barrels) in January—the first year-over-year increase in 10 months, according to Statistics Canada.
The federal agency reported Wednesday that higher crude oil prices and rising demand from the United States were the main factors for the gains in January.
“Driving the overall increase in crude oil production were synthetic crude oil (+12.0 per cent) and crude bitumen (+3.6 per cent). Strong output in the oil sands continued in January, up 6.9 per cent year over year to 16.0 million cubic metres. This was slightly lower than the record 16.3 million cubic metres produced in December 2020. Equivalent products (+2.2 per cent) were also up in January,” explained StatsCan.
“Heavy, light and medium crude oil extraction offset the overall gain, down 9.7 per cent to 6.0 million cubic metres in January. Production of these products has yet to return to pre-pandemic levels as January marked the tenth consecutive monthly year-over-year decline. Daily production of crude oil (excluding equivalent products) declined 1.0 per cent from December to 708.7 thousand cubic metres. Although down slightly, the high levels of production observed in December continued into January, largely because of increased demand for Canadian crude from the United States.”
Following an 11.8 per cent gain in December, the crude oil and bitumen price index was up 12.2 per cent in January—the third consecutive monthly increase and the largest rise since June 2020. The gain was largely the result of an agreement between the Organization of the Petroleum Exporting Countries and other major producers to cut crude oil production at the beginning of January, added the federal agency.
“After two monthly increases, global consumption of crude oil declined 3.3 per cent from December to January, according to the US Energy Information Administration. Similarly, consumption in Canada was down 2.3 per cent, partly because of renewed pandemic-related restrictions in Quebec and Ontario following a resurgence of COVID-19 cases,” said the report.
“Exports of crude oil and equivalent products fell 1.0 per cent year over year to 19.3 million cubic metres in January. Despite the decline, this was the highest level of exports since March 2020, as demand for Canadian crude from US-based refineries continued to rise.”
A report released Wednesday by ATB Economics said average annual global oil consumption will rise by 5.5 million barrels per day in 2021 compared to last year, according to the Short-Term Energy Outlook released by the U.S. Energy Information Administration (EIA).
“The rebound is not, however, enough to get back to the pre-pandemic level, with global consumption still down by 3.5 million barrels per day compared to 2019. Global consumption will return to pre-pandemic levels in 2022. Of critical importance to Alberta’s oil patch is that U.S. and Canadian oil consumption are forecast to grow this year and next, although by not quite enough to regain all the ground lost in 2020. U.S. consumption in 2022 is forecast to be 0.6 per cent below its 2019 level; Canada’s is expected to be 3.1 per cent lower,” said ATB in its daily economic update The Owl.
“Consumption is, of course, only one side of the equation. Fortunately, the EIA is also forecasting a balanced market with supply roughly in line with demand over the next two years. Here’s the catch. The supply forecast is hanging by a thread held by OPEC. If the cartel holds fast and does not flood the market, prices should stay relatively strong. The other wild card is the path of the pandemic and its impact on demand. The forecast assumes strong GDP growth in the U.S. and the continued reopening of the global economy as vaccination levels increase.”