On Monday, the Saskatchewan government announced it would not be following Alberta's plan to cut oil production in an effort to reduce the punishing price differential plaguing energy producers.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $52.31 per barrel, down 95 cents, or 1.8 percent. The result has been oil prices for Western Canadian Select so low the province's energy resources are "being sold for pennies on the dollar", according to the premier.
Alberta now produces 190,000 barrels a day more than can be shipped and has twice the normal levels of oil in storage - a total of 35 million barrels.
Likewise, I support the premier's decision to purchase more locomotives and rail cars to get our product to market.
Producers will be allowed to choose where they cut production, allowing them to shut in their least lucrative barrels to make up their cut quota, instead of having to cut across the board, Alberta said.
Alberta has the legal authority to mandate the cuts because mineral rights are owned by the province.
Bank of Montreal economists Benjamin Reitzes and Robert Kavcic predicted in a research note Monday that gross domestic product could expand by 1.8 per cent next year, instead of the 2 per cent forecast previously, if there are extended shutdowns in the oil sector.
The glut in reserves driving down prices needs to be addressed before producers begin taking more drastic steps such as slashing capital projects or laying off workers, Notley said.
More broadly, the slide in USA oil followed a tumble in global stock markets on Tuesday, with investors anxious about the threat of a widespread economic slowdown.
Watch below: (From Dec. 3, 2018) For the first time in a generation, the Alberta government will impose a cap on the amount of oil that industry is allowed to produce. "The measures Premier Notley announced today will help balance the market in the short term until new rail and pipeline capacity comes on stream late next year and into 2020".
Official US government oil production and inventory data is due later on Wednesday.
In the correspondence, they note nothing is in the meeting agenda regarding the crisis faced by the energy industry, as well as the price differential now crippling the Albertan, Saskatchewan and Canadian economies.
Alberta Party Leader Stephen Mandel said the government was warned in the spring that this crisis was coming, and should have acted sooner. "Unfortunately, this intervention appears not to recognize the investment decisions companies have made to access higher value markets". The NEP remains infamous in Alberta, seen both as shorthand for government overreach and a reason to be wary of leaders named Trudeau.
"Our oil production and market for our product is significantly different than Alberta's".
Producers are making 190,000 raw crude oil and bitumen barrels per day (bpd) more than can be shipped out of Alberta, said the province.