Alberta Premier Jason Kenney is calling on Ottawa for "significantly more action" to support the energy sector as global demand for crude oil collapses amid the coronavirus pandemic.
In a series of Tweets, Kenney showed a screengrab of Western Canada Select (WCS) crude oil quoted at -$0.01 per barrel. The North American benchmark West Texas Intermediate, meanwhile, hit a 21-year low on Monday.
Oil traded near zero, after plunging below that level for the first time in history amid rapidly filling American storage tanks, as the U.S. benchmark’s May contract entered its final trading session.
Futures in New York on Monday fluctuated between positive and negative territory, after plunging to as low as -$40.32. The June contract, where the majority of trading is now taking place, fell below $20 U.S., as did Brent crude oil futures for the same month.
With the coronavirus pandemic bringing the U.S. and much of the global economy to a standstill, processors are using far less crude, leaving so much unused oil that American energy companies are running out of room to store it. And if there’s no place to put the oil, nobody wants a crude contract that is coming due.
The price collapse is reverberating across the oil industry, with prices trading below zero across the U.S. WTI Midland in Texas stood at -$13.13 a barrel, while crude in Alaska was at -$46.63 in late trading Monday.
The federal government in Ottawa announced last week a $2.45-billion aid package designed to maintain thousands of jobs across Canada’s energy sector. Kenney said that while he appreciates Ottawa’s efforts, "significantly more action is urgently needed to ensure a future for an enormous part of Canada’s economy."
When asked what other measures were on the way for the oil and gas sector, Finance Minister Bill Morneau didn’t offer any details, but noted support for larger companies was “certainly on our agenda.”
Kenney has said the energy sector needs more than $20 billion as Canadian energy producers burn through cash and struggle to raise capital during the global rout of oil prices.
