Deloitte Canada predicts higher Canadian crude prices in 2024

Calgary, October 4, 2023 – Canadian oil producers are likely to enjoy higher crude prices next year when the TMX pipeline begins transporting about 590,000 bbl/d for export, according to the latest forecast from Deloitte Canada’s Resource Evaluation and Advisory (REA) group. Much of these additional exports will go to markets outside the United States, allowing Canadian producers to reduce their dependence on U.S. refinery operations and narrow the WCS price differential.

“The extra capacity created by the TMX pipeline is expected to boost Canadian production by about 375,000 barrels a day over the next two years,” says Andrew Botterill, national Oil, Gas & Chemicals leader at Deloitte Canada. “That’s more than the total amount added over the last five years.”

Deloitte also expects global crude prices to remain at elevated levels within the coming months despite rising oil production in Canada and the U.S.

“The extra supply of North American crude will likely continue to be offset by voluntary supply cuts from some OPEC+ member countries, moderating any downward pressure on prices,” says Botterill. “We saw the same thing happen this summer, when oil prices surged even as U.S. production volumes recovered to near pre-pandemic levels and exports rose from Iran and Venezuela.”

Unlike crude prices, natural gas prices are expected to remain weaker for several more months, especially if, as predicted, the coming winter will be warmer than usual. According to the report, historically high production levels in Canada and the U.S., combined with high storage levels in Europe and North America, have combined to keep gas prices lower.

In the spotlight article within the report titled Investing in Canada, Canada’s move to clean energy will require all levels of government and the private sector to work together, share the costs and address any challenges that arise. We believe all levels of governments can make the lower carbon energy transformation attractive to investors, particularly by adopting investment models that encourage public-private collaboration and through policies that help to de-risk tangible opportunities, including streamlining permitting and approvals. We expect the private sector to take on more investment as technology and returns are better understood and risks can be managed.

“Public-private partnerships have at times allocated too much risk to the private sector, but we can learn from the past so organizations work together as true equals,” says Botterill. “Then the market can prioritize the best projects to pursue and how each of them can contribute to our collective success.”

For Deloitte’s complete oil and gas price forecast and the full details of its paper on investing in Canada’s move to clean energy, visit our website.