Updated August 2017
In 2016, the WTI price averaged US$43.40 per barrel (bbl), down from US$48.79/bbl in 2015.Figure 1.1 [Tableau] shows historical and forecast WTI prices at Cushing, Oklahoma. The WTI base price is forecast to be US$53.00/bbl in 2017.
The low price scenario, with WTI at US$44.00/bbl, reflects the possibility that global crude oil inventories will not come into balance in 2017, particularly if OPEC members and the non-OPEC members who also committed to do so do not cut production by combined output of 1.8 106 bbl/d.
The high price scenario, with WTI at US$60.00/bbl, reflects the possibility that global crude oil inventories will decrease quicker than forecast in the base price scenario and that the lower production target will be adhered to.
The WTI crude oil price is expected to gradually strengthen to US$83.26/bbl by 2026 in the base price scenario. In the low and high price scenarios, WTI is forecast to reach US$67.00/bbl and US$109.08/bbl, respectively. The low price scenarios assumes strong global production growth, whereas in the high price scenario, new supply is expected to be inadequate to offset declines in existing production due to insufficient capital spending for new development.
As illustrated in Figure 1.2 [Tableau], in 2016, U.S. crude oil production is estimated to have decreased by 6 per cent to 8.9 106 bbl/d─1.41 million cubic metres per day (106 m3/d)─compared with 2015. Even though WTI prices began to fall in 2014, U.S. production continued to grow up until 2015 as producers became more efficient and hedged against low prices. As oil prices continued to fall in 2016, expensive and less efficient wells and those of small producers were shut in, ultimately reducing the production of oil. This has led to lower capital investment, which is not sustainable over the long term.
In 2016, CLS averaged Cdn$53.95/bbl, 7 per cent lower than 2015 and down from Cdn$57.76/bbl in 2015. As illustrated in Figure 1.3 [Tableau], CLS is projected to rise to Cdn$64.01/bbl in 2017, mirroring the forecast increase in the WTI price, and is expected to continue to strengthen throughout the forecast period, averaging Cdn$95.51/bbl by 2026, with a range of Cdn$77.39/bbl to Cdn$127.97/bbl.
How the CLS price is derived can be found in the methodology section.
In 2016, WCS averaged US$29.65/bbl, down 16 per cent from US$35.27/bbl in 2015. The differential between WCS and WTI averaged US$13.50/bbl (32 per cent) in 2016 and is forecast to remain around this level in 2017 before widening over the forecast period due to insufficient pipeline capacity. As illustrated in Figure 1.4 [Tableau], the WCS price is projected to average US$38.69/bbl in 2017 and increase for the remainder of the forecast period, reaching US$65.78/bbl in 2026.
How the WCS crude oil price is determined can be found in the methodology section.