Quote:
Originally Posted by Flash Walken
Can you explain this further?
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Not everyone is hedged, and as of today the total market value of Canadian energy companies are back at 2001 levels.
With the demand destruction and OPEC deal over, there's probably 5-6Mbpd of excess supply as of April 1st. IHS Markit has pegged the virus demand destruction at 3-4Mbpd in Q1, and who knows when that improves. Back in 2016 there was maybe 1.5-2MM barrels of excess supply and we hit $26, but only for a few weeks. $25 WTI with transportation and differential could mean $10-15 WCS in Edmonton.
CVE and Husky are not hedged and rely on their transportation and refineries to cover them. Rail to Gulf Coast is $15-18/barrel. Crack spreads are low and the strip for those goes below $10 in Q3.
The virus was a black swan and the OPEC breakup today looks like another one. Hopefully we see a cut in the coming weeks or this could get ugly if we have sustained demand destruction and tons of oversupply.