Briefing

Oil firms look to cut costs as record low prices ripple throughout Canadian economy

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Calgary-based Cenovus Energy is looking to cut spending for this year by 32 per cent after losing more than half its value Monday. Chevron, Occidental Petroleum, Marathon Oil, Diamondback Energy and Parsley Energy are doing so, as well. (Regina Leader Post, CBC News)

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Talking point: It’s not just oil firms that may be in for tough times. Canadian banks increased their oil and gas lending at roughly double the rate of overall business loan growth over the past three quarters, leaving them particularly exposed following yesterday’s price drop, which was the largest since the Gulf War. Finance Minister Bill Morneau said Monday he’s had “extensive discussions” with the banking industry. Alberta opposition leader Rachel Notley has asked Premier Jason Kenney to put together a new budget taking the falling oil revenues into account. It’s possible the low prices could extend for years to come—Moscow said on Monday it can handle prices of US$25 to US$30 per barrel for up to 10 years. A barrel of crude is currently trading at about US$35—a 15 per cent jump since yesterday, but still a 43 per cent year-to-date drop. Alberta’s budget, by contrast, is based on oil prices being US$58 per barrel in 2020.