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OTTAWA — Saudi Arabia slashed the price it will charge for crude in Asia and the United States as the OPEC giant battles to maintain its share in an over-supplied global market.
The move prompted another sell-off among skittish traders, who are wondering where the floor in prices is. The 12-member Organization of Petroleum Exporting Countries last week refused to cut its production quota in the face of a global glut, sending oil prices into a tailspin.
It remains unclear still how low prices will go – and how long it will be before they recover. In New York on Thursday, the benchmark West Texas Intermediate fell 70 cents to $66.68 (U.S.) per barrel, after falling as low as $66.09. In London, Brent crude was down 80 cents to $69.12.
The Saudi move signals a drawn-out standoff among producers that is likely to weigh on oil prices for months and hit Alberta’s oil industry. Canadian energy shares sank another 5 per cent Thursday, extending their slide in recent weeks as investors brace for sharply lower profits from the sector. The dip in energy stocks helped send the S&P/TSX composite index tumbling 2 per cent to close at 14,469.95.
Bank of Canada Governor Stephen Poloz weighed in on oil’s slide this week, telling a conference that lower oil prices would shave a third of a percentage point off economic growth next year. A lower oil price “reduces the amount of income flowing into Canada, but in the short term it’s good for consumers,” he said.
Some Canadian oil executives have turned cautious in the wake of oil’s sudden reversal, planning to pull back spending and expansions if prices remain weak. Heightening their fears was the Saudi move Thursday, which sent a stark signal to the market that a price war is under way.
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