Canada’s challenge is how to make money selling the world’s cheapest oil — but it can be done – FINANCIAL NEWS-ecozik.com
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Canada’s challenge is how to make money selling the world’s cheapest oil — but it can be done

Calgarians are seeing more and more cheeky ads referring to the oil downturn in their city like this one at the Barcelona Tavern.

CALGARY – Rock bottom oil prices may be the single biggest challenge facing Canada’s economy in 2016.

Never mind $35 a barrel, Canada’s oil is selling for nearer to $20

As oil crashes through $35 in Ny today, Alberta, which produces the world’s cheapest oil in the highest cost, has already been coping with a realistic look at reduced prices. Read on

But Tim Pickering, president and CIO of Auspice Capital Advisors Ltd., a commodities and alternative investment trading firm based in Calgary, said additionally they supply the space and the incentive to make long-overdue improvements to the Canadian oil crude market – and together with it there is chance to earn money.

Efforts are already under way to make the two most talked-about improvements – changing the trustworthiness of Canada’s oil, which for years continues to be disparaged as ‘dirty’ by the U.S. environmental movement, and building new pipelines so Canadian oil barrels can be sold in markets away from U.S.

Alberta’s tough new climate change policy, with a cap on oilsands emissions, has been touted as the ticket to win a reprieve from oilsands and pipeline critics.

Today, with 99 per cent of Canada’s oil exports visiting the United States, there isn’t any incentive for that Americans to pay Canada a greater price, said Pickering, an experienced commodities trader and University of Calgary finance grad who started in the business at TD Bank after which Royal Dutch Shell PLC before launching their own trading shop 10 years ago.

They are becoming cheap safe oil, and bitching about it when they do

That dependence means Canadian crude could be knocked down by US$10 a barrel, which makes it the earth’s cheapest oil. This means that when oil was trading at US$35 a barrel in Ny in mid-December many Canadian producers were actually pocketing nearer to US$25.

“Who is saving the cash? America,” Pickering said. “They are becoming cheap safe oil, and bitching about this while they do. And it is nothing like we can say to them, ‘This is not right, we will sell it to China,’ since there is no pipe setting it up towards the water and no boat going to China tomorrow.”

Once those pipelines are built, though, there are many customers over the Pacific Ocean who’d gladly buy Canada’s secure barrels only to diversify their supplies away from the Middle East, he said.

But another big improvement can come from the less obvious place – by making the trading of Canadian oil more liquid and much more transparent, Pickering said.

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