Moe, Notley raise oil concerns with Trudeau ahead of meeting

Alberta premier announces 8.7 per cent oil production cut to increase prices

Alberta's decision to mandate output cuts to reduce a supply glut will have negative effects on North American producers of lighter oil used for blending and US refiners importing crude via rail, even as several major Canadian energy companies cheered the move. U.S. refiners have turned to rail to ship incremental crude barrels to the U.S. Gulf Coast to take advantage of discounted prices.

Oil prices were pressured by a weekly report from the American Petroleum Institute (API) that said USA crude inventories rose by 5.4 million barrels in the week to November 30, to 448 million barrels, in a sign that US oil markets are in a growing glut.

"Beginning on January 1st, the province of Alberta will mandate an across the board reduction of 325,000 barrels per day in production, or roughly 8.7 per cent", she said, Sunday.

It also hasn't been much affected by the price differential.

"Suncor believes the market is the most effective means to balance supply and demand and normalize differentials", it said.

Similarly, while oilsands giants like Cenovus Energy Inc. and Canadian Natural Resources Ltd. will likely be happier, it's far from clear whether this will translate into anything that helps the NDP's political circumstances.

Canada's largest oil and gas company, Suncor Energy Inc., said Monday its estimate of the impact of the provincial cuts will be provided when it issues its 2019 capital and production guidance. Still, she said many pipeline delays were hard to predict amid assurances by industry and government that pipelines could be successfully built to tidewater.

Dan McTeague with GasBuddy.com says B.C. drivers shouldn't be anxious about to fill up their vehicles because our gasoline is made up of a blend of many different oils.

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Western Canadian Select for January traded as much as $19.75 (U.S.) a barrel below USA crude futures early Monday, a $9.25 leap from Friday, before slipping back to a $23 discount.

The government of Alberta is taking action to ease a regional glut of oil brought on by the continued delays of much-needed oil pipeline projects. "We are recognizing that there are going to be some unpredictable consequences and they are going to try and monitor it closely".

The bounce helps to explain the Canadian dollar strength today.

In written comments Monday, energy minister Amerjeet Sohi said that Ottawa shares in "Alberta's frustration at the ongoing and unacceptable discount" on Canadian crude.

While praising her main opponents in the Alberta legislature, Notley put the blame for the current state of affairs right where most Albertans seem to think it belongs: On the federal government for not approving the pipelines Albertans have now persuaded themselves will solve all their economic problems.

"We are at an historically crucial point in terms of how tight this infrastructure is", Oberstoetter said.

The extraordinary intervention into the market was supported by some top Canadian oil executives. "We interpret the phrasing of the announced cut as keeping production down 50 kb/d [year-on-year] in 2019 and 200 kb/d below our prior assessment with the greatest impact on 1Q19 (down 225 kb/d quarter-on-quarter) before new rail capacity gradually comes online from April onward", Goldman Sachs wrote in a note.

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