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A positive outlook from 2019 for oil prices according to Deloitte

(iStock Photo)

CALGARY (660 NEWS) – Oil prices are expected to improve slightly this year according to a new industry forecast from Deloitte.

It highlights a number of reasons why Canadian crude prices should continue to improve this year.

Most of Canada’s oil goes to U.S. refineries, and demand is expected to increase.

There’s also a glut of crude, which has been pulling down prices and that should subside with production cuts that kick in this month.

“There is a really strong demand story and I think that’s been often lost in the conversations of late, is demand in both refineries and globally for oil and gas has been firm. We are seeing continued growth in demand in refineries in the U.S.,” said Andrew Botterill with Deloitte.

Botterill believes the 2019 numbers look a bit better only because last year ended so badly.

“2018 is looking up from where prices are currently trading today,” Botterill said, “However, it is materially down from where we were through much of 2018.”

Another positive sign, Botterill expects the price differential between Canadian oil and West Texas Intermediate (WTI) will remain relatively low. One of the biggest factors for Alberta has been the price difference between Western Canadian Select (WCS) and WTI.

That price differential currently around $16 a barrel — down from $45 back in November according to CME Group. 

“At least some optimism when we look at how bad things were in November and December and we think it will be a really bumpy first half of the year as we get through all this oversupply. But we do think that some of the moves that have been made by both producers and the government are going to help make things a little bit better this year.”

The forecast also looks at transportation issues. More rail cars and Enbridge’s Line-3 pipeline to Superior, Wisconsin will add nearly half-a-million barrels a day of export capacity.

The extra rail cars should increase exports by 120,000 barrels a day by 2020, while the Enbridge pipeline will add approximately 370,000 barrels a day of export capacity, an increase of about nine per cent.

The entire forecast can be seen below.

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