The rapid rise in oil prices is a welcome development for any oil producer. The spike of 85% is a desirable level for many, while this is a typical trading day for Canada. The local oil market is considered to be unique. Only in Canada, a barrel can cost $40 lower than that of the rest of the world. Given this fact, it is not surprising that the price can soar or collapse by almost 100%.
Not long ago, the price of the Western Canadian Select oil dropped to $20 per barrel. A similar discount was needed to offset the sharply jumped costs for the transportation of oil. After the logistics situation returned to normal, Canadian oil prices also increased sharply - by 85% at once. In addition, the price growth was stimulated by the statement of Premier of Alberta Rachel Notley (Alberta is the primary supply and service hub for Canada's crude oil) about a production cut by 325 thousand barrels per day.
The market reaction was not long in coming. It is worth noting that the price may rise even higher, since the decline in production will begin in January, and manufacturers and processors are negotiating future shipments. This, in turn, will benefit Canadian producers, which have already begun to revise capital expenditure plans for 2019 under pressure from the low price of oil.
