Canada produced 23.7 million cubic metres (148.9 million barrels) of crude oil and equivalent products in March, up 3.5 per cent from March 2019, when ongoing government-imposed production cuts limited crude output in Alberta, according to a report released Wednesday by Statistics Canada.
Over the past year, crude production has been slowly ramping up due to the gradual easing of these production cuts, said the federal agency.
“Despite the year-over-year increase, daily production of crude oil (excluding equivalent products) fell 1.8 per cent from February to 692.7 thousand cubic metres in March—the lowest daily production level since October 2019. The main contributor to the decrease was oil sands extraction, which includes crude bitumen and synthetic crude oil, down 1.9 per cent to 478.6 thousand cubic metres. Extraction of heavy, medium and light crude oil declined 1.7 per cent to 214.1 thousand cubic metres per day,” said StatsCan.
“Energy markets were confronted with unprecedented challenges in March. The Organization of the Petroleum Exporting Countries (OPEC) and Russia were unable to reach an agreement to reduce crude oil production. Consistent levels of production coincided with a general decline in demand due to COVID-19. This resulted in the supply of crude oil exceeding demand, a build-up in inventory levels and the collapse of the global price of crude oil, forcing oil producers—including those in Canada—to consider voluntary production cuts.”
The report said physical distancing measures and travel restrictions imposed by governments to reduce the spread of the virus further diminished the demand for refined petroleum products such as motor gasoline and jet fuel.
“The Industrial Product Price Index decreased 0.9 per cent from February to March, the largest monthly drop since June 2019. The decrease was mainly attributable to lower prices for energy and petroleum products (-14.6 per cent). The decline in these energy products was largely driven by a 39.7 per cent drop in crude oil prices in March, according to the Raw Materials Price Index.”
