Investors — and Albertans — were cautiously optimistic for higher budget surpluses and bulging investment portfolios after benchmark North American oil prices topped a key psychological threshold of US$90 (West Texas Intermediate - WTI)) for the first time since last November.. Oil price chartOil prices hit a 10-month high above $90 per barrel on Thursday. .That’s because WTI, which is the basis for Canadian crude prices, were up more than 2%, or US$1.86 on Thursday, to $90.34 a barrel. Alberta’s signature bitumen blend, Western Canadian Select, was going for $79.79 at Cushing, OK. which was also up about 2% or US$1.50 per barrel..That in turn sent the Toronto Stock Exchange surging by 289 points, led by Calgary-based energy companies..Because oil is priced in US greenbacks but sold in loonies, that works out to about $121 dollars. .And — given that each dollar up or down is worth about $625 million to the Alberta Treasury — that’s about $8 billion to the surplus, if prices were to hold at that level until the end of the fiscal year..By most accounts, it will..This week the International Energy Agency (IEA) warned that output cuts from BRICS members Saudi Arabia and Russia could result in a “substantial” market deficit for the rest of the year..“From September onwards, the loss of OPEC+ production will drive a significant supply shortfall through the fourth quarter,” said the agency in its monthly report..On Tuesday, OPEC released its own market report that held bullish demand forecasts into 2024 despite higher global interest rates and recession fears..Nonetheless, higher demand is indicative of higher economic growth — especially in the US — which also happens to be the largest customer for Canadian barrels..“An even stronger-than-anticipated growth trend in China, supported by further fiscal and monetary stimulus, may provide additional support to global economic growth. Moreover, if the US continues to keep its current momentum, growth could turn out to be higher than expected,” it said..It’s expecting demand to hit an all-time record high of 104.3 million barrels per day (bpd) in 2024 on top of a record 102.1 million bpd in 2023..On Thursday, the cartel took the unusual step of publicly blasting the IEA for suggesting “peak demand” for fossil fuels will occur by the end of this decade..“It is an extremely risky and impractical narrative to dismiss fossil fuels, or to suggest that they are at the beginning of their end. In past decades, there were often calls of peak supply, and in more recent ones, peak demand, but evidently neither has materialized,” OPEC Secretary General Haitham Al Ghais said in a special statement posted to its website..“Such narratives only set the global energy system up to fail spectacularly. It would lead to energy chaos on a potentially unprecedented scale, with dire consequences for economies and billions of people across the world. This thinking on fossil fuels is ideologically driven, rather than fact-based.”.As for so-called ‘net-zero’ policies in Western nations, including Canada’s, OPEC had more questions than answers. .“How much will they cost in their current form? What benefits will they bring? Will they work as hyped? Are there other options to help reduce emissions? And what will happen if these forecasts, policies and targets do not materialize?”
Investors — and Albertans — were cautiously optimistic for higher budget surpluses and bulging investment portfolios after benchmark North American oil prices topped a key psychological threshold of US$90 (West Texas Intermediate - WTI)) for the first time since last November.. Oil price chartOil prices hit a 10-month high above $90 per barrel on Thursday. .That’s because WTI, which is the basis for Canadian crude prices, were up more than 2%, or US$1.86 on Thursday, to $90.34 a barrel. Alberta’s signature bitumen blend, Western Canadian Select, was going for $79.79 at Cushing, OK. which was also up about 2% or US$1.50 per barrel..That in turn sent the Toronto Stock Exchange surging by 289 points, led by Calgary-based energy companies..Because oil is priced in US greenbacks but sold in loonies, that works out to about $121 dollars. .And — given that each dollar up or down is worth about $625 million to the Alberta Treasury — that’s about $8 billion to the surplus, if prices were to hold at that level until the end of the fiscal year..By most accounts, it will..This week the International Energy Agency (IEA) warned that output cuts from BRICS members Saudi Arabia and Russia could result in a “substantial” market deficit for the rest of the year..“From September onwards, the loss of OPEC+ production will drive a significant supply shortfall through the fourth quarter,” said the agency in its monthly report..On Tuesday, OPEC released its own market report that held bullish demand forecasts into 2024 despite higher global interest rates and recession fears..Nonetheless, higher demand is indicative of higher economic growth — especially in the US — which also happens to be the largest customer for Canadian barrels..“An even stronger-than-anticipated growth trend in China, supported by further fiscal and monetary stimulus, may provide additional support to global economic growth. Moreover, if the US continues to keep its current momentum, growth could turn out to be higher than expected,” it said..It’s expecting demand to hit an all-time record high of 104.3 million barrels per day (bpd) in 2024 on top of a record 102.1 million bpd in 2023..On Thursday, the cartel took the unusual step of publicly blasting the IEA for suggesting “peak demand” for fossil fuels will occur by the end of this decade..“It is an extremely risky and impractical narrative to dismiss fossil fuels, or to suggest that they are at the beginning of their end. In past decades, there were often calls of peak supply, and in more recent ones, peak demand, but evidently neither has materialized,” OPEC Secretary General Haitham Al Ghais said in a special statement posted to its website..“Such narratives only set the global energy system up to fail spectacularly. It would lead to energy chaos on a potentially unprecedented scale, with dire consequences for economies and billions of people across the world. This thinking on fossil fuels is ideologically driven, rather than fact-based.”.As for so-called ‘net-zero’ policies in Western nations, including Canada’s, OPEC had more questions than answers. .“How much will they cost in their current form? What benefits will they bring? Will they work as hyped? Are there other options to help reduce emissions? And what will happen if these forecasts, policies and targets do not materialize?”
