January was a rough month for oil prices, according to data released Monday by ATB Financial’s Economics & Research Team.
Just how bad?
Well, citing information from oilprice.com, ATB said a barrel of West Texas Intermediate (WTI) crude went from US$61.18 at the start of January to $51.56 at the end of the month—a drop of 15.7 per cent. .
“We haven’t seen a price slide like this in January since 1991,” said ATB in its daily economic update The Owl.
Also, over the same period, it said the benchmark for Alberta’s heavy crude, Western Canadian Select, fell 18.5 per cent, going from $37.71 to $30.73.
“While there are always multiple factors at play, concern over the impact of the coronavirus outbreak on the demand for crude helps explain the slide. Traders are worried state-imposed travel restrictions and fear of contracting the virus will dampen the demand for jet and other fuels. A slower Chinese economy in the wake of the outbreak is also a point of concern,” said the ATB report.
“Standing behind this is a global crude market with ample supply. Voluntary production cuts by OPEC and its partners are the only thing preventing another supply glut and subsequent price crash. The sudden impact of the coronavirus on the demand outlook may lead OPEC to move its next meeting from March to February.
“On top of the international factors, ongoing transportation constraints and an abundance of oil in storage are contributing to Alberta’s oil price issues. The industry is also facing new standards from International Maritime Organization that cap the amount of sulfur allowed in marine fuel, a challenge seeing as Alberta’s heavy oil is relatively high in sulfur. “
Mario Toneguzzi is a business reporter in Calgary.
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