Oil prices continue to show indications of stabilizing, giving investors more confidence to boost their exposure to Canadian energy stocks. But?there\’s still lots of reason to be cautious whether or not the data appear to indicate a bottom for crude.
RBC cuts Canada\’s growth outlook but says oil plunge won\’t \’derail\’ economy
Canada\’s largest commercial bank expects the impact of weaker oil prices to slow – not \”derail\” – overall economic growth this year, even though the hit to resources-heavy provinces, such as Alberta, will be \”significantly\” larger.
RBC Economics has cut its 2015 growth outlook to 2.4%, down from a December forecast of 2.7%, saying the oil-price plunge is \”clearly a negative\” for the oil and gas sector, but it will be offset by increased consumer spending and development in exports. Keep reading.
Brent prices are up more than 30% since bottoming in mid-January, but WTI has only risen about 10%, widening the gap between the two by about US$9.80 per barrel. Concerns about rising storage levels and available storage capacity are partly responsible.
Energy analysts at Raymond James in Calgary believe the present rate of injections could cause Cushing, Okla. – the most important storage hub on the planet – to close full capacity within 11 weeks.
“What happens after that point is really a much bigger question mark, however it would appear to all of us that the requirement for additional storage won\’t go away in the near future,” the analysts said inside a note to clients, adding that further volatility in WTI prices should be expected as Cushing approaches full capacity.