OPEC backed further away from its battle for market share with U.S. shale producers this week, but a Canadian energy titan cautions those low-cost producers aren’t all they’re cracked up to be.
“We aren’t panicking at this stage,” said Bonterra Energy CEO George Fink in an interview with BNN Thursday. “I think that the shale production in the U.S. right now, the impact of it is maybe being overestimated by some of the investors in North America.”
The price of oil collapsed in recent years as the Organization of the Petroleum Exporting Countries waged a battle for market share with low-cost U.S. shale producers. From a high of more than US$110 per barrel in 2013, the benchmark West Texas Intermediate fell as low as US$26 per barrel in early 2016, ravaging Alberta’s economy in the process -- with the spillover effect being felt across Canada.
OPEC has gradually been stepping back from the turf war with shale. The group first announced coordinated production cuts last November, and extended the reduced output for nine months this week.
The cartel’s de facto leader, Saudi Arabia, and Russia have gone so far as to declare they’ll do “whatever it takes” to balance the market. But that hasn’t put a floor under the price of oil, which plunged as much as 5.7 per cent Thursday before stabilizing in early trading Friday.
“We can get through these tough times,” added Fink, who believes oil could soon reach US$65 per barrel. “We’ve had to do it in the past and we’ll get through this one.”
“The sun will come and rise on this industry once again in the future.”
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