The energy market is leaving this decade on a high note.
That’s according to Auspice Capital which notes Canadian oil saw the biggest increase in performance this year across the globe, up over 110 per cent from the start of 2019.
The demand is there, however, the country continues to have struggles getting its product to market.
CIO Tim Pickering tells Mix News the lack of pipelines is causing Canada to miss a big opportunity to be a huge global provider.
“The marginal movement of oil has been by rail, that has grown and been a very important part of keeping this market strong, we haven’t solved the overall pipeline problem… rail can’t solve everything, there’s just not enough of it.”
The majority of oil sold was shipped to our southern neighbours.
Canadian crude, which is mostly heavy oil, is a top commodity for the United States as they barely produce this type of product.
“Over the last 15 or so years, US refineries has become more dependent on heavy oil and this demand continues to grow as those refineries have either been upgraded or purposed built to process heavy oil,” added Pickering.
Meanwhile, the price differential for Canadian oil compared to other markets has widen from the start of 2018.
At the beginning of the year, the margin was around $18, now it’s sitting around $20.
Pickering says this can be looked at as a positive.
“What can be argued is that if it gets to narrow then we start to lose the buyer because the discount versus getting it from other places is challenged.”
He adds it’s hard to find a perfect middle ground that addresses the price gap but also continues to encourage more investment.