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Energy Summary for May 26, 2020

2020-05-26 20:32 ET - Market Summary

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by Stockwatch Business Reporter

West Texas Intermediate crude for July delivery added 63 cents to $34.35 on the New York Merc, while Brent for July added 74 cents to $36.17 (all figures in this para U.S.). Western Canadian Select traded at a discount of $8.00 to WTI, unchanged. Natural gas for June added eight cents to $1.79. The TSX energy index added 1.05 points to close at 79.84.

Oil traders were in a bullish mood after various analysts and banks predicted that global oil markets could find balance within mere weeks. Output cuts by the world's largest producers, combined with the easing of COVID-19-related lockdowns, are closing the gap between supply and demand. One research institute, the Vienna-based JBC Energy, predicted the market will even enter "net short territory" next month. JBC mused that the shortage could be "to the tune of a non-negligible 1.5 million barrels per day."

Here in Canada, "the quickest, surest path for Canada's postpandemic recovery is to fire up its big economic engines." That was the key point made in a new article by the Business Council of Business Columbia, which sought to answer the headline question, "Which industries pay Canada's bills?" and to identify the industries most crucial to economic recovery. Energy is up at the very top. "Mining, oil and gas production generates almost twice as much real income per unit of labour as the next highest value-added industries," noted the council. For every hour worked in the natural resource sector, Canada generates $304 of real income, compared with $184 for the next highest category, utilities. (The others in the top five are real estate, at $135 an hour, information and cultural, at $99, and finance and insurance, at $76.) Canada's export mix also illuminates the importance of energy (here treated separately from mining and metal products). "Energy -- including oil and gas, coal, nuclear fuel, electricity, and refined petroleum products -- is easily the biggest earner," said the council. The export earnings from this industry are twice as much as the next largest sectors.

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