Folks can search the blog for oil and pricing to better understand where I am coming from in this bit of idle chattering; I won't go through all of it again.
But if one wants to connect the dots for a perfect storm, it's not difficult
- the Canadian economy and the strength of the loonie is directly related to the Canadian oil industry
- Canada's oil industry, for all practical purposes: heavy oil from the oil sands
- there is a glut of oil on the market
- Keystone XL 1.0 was killed
- Canadian pipelines to the west coast are inadequate to make up the slack caused by demise of KXL1
- US east coast terminals prefer Bakken oil, light and sweet
- more and more talk of global recession (half of EU already in recession); China slowing down
- Canadian oil sands oil is most expensive of all oil sources to produce -- by a significant margin
If the Canadian oil industry flounders/founders, folks will look at the three points in bold above. Had the global economy been growing and had there been a better demand-supply imbalance in favor of the oil industry, killing of the KXL1 would not have mattered. It would have been a speed bump. But with the other two (a global recession and a glut of oil), killing the KXL1 resulted in the perfect storm for the Canadian oil industry.
I can think of only one thing that could make things worse for the Canadian oil industry: a meteor hitting Alberta. (Actually I can think of one thing worse, but as it is, I already get enough "hate mail.")
I'm not a currency trader, but if...
Disclaimer: this is not an investment site. This is not a recommendation to buy, sell, or hold loonies.
By the way, I wonder if as regards the Bakken, the Canadian oil sands is not the canary in the coal mine?
