Canada adds to oil gusher

published 7 July 2017

Oil exporters' cartel Opec is struggling to lift the oil price by cutting production. Oil has slid to a seven-month low of less than $45 a barrel. Opec countries that were not part of the agreement have been pumping more, while America's increasingly cost-efficient shale-oil producers are also drilling more. The number of rigs in operation has been on the rise for months, heralding higher production.

Opec might also "want to cast an eye north", says Gregory Meyer in the Financial Times. Canada is home to the world's third-largest oil reserves. Output there is on the rise thanks to investment in drilling made several years ago. Extracting oil from the tar sands of Alberta requires several years of planning and billions in investment, but the projects "plod forward once begun". Investments authorised when prices were more than $100 a barrel are coming to fruition now.

The upshot is that Canadian output is set to rise by 570,000 barrels per day in 2017 and 2018 combined almost a third of the 1.8 million barrels per day Opec said it planned to cut in the first six months of 2017. The global oil glut isn't going anywhere.

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Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.