Canadian Finance Minister Sticks to Latest Oil Price Projection

The Canadian Minister of Finance, Jerome Kennedy, is standing by the budget assumptions of the governments of Labrador and Newfoundland regarding the oil price per barrel, despite the fact that it was way off in the past year.

The government is supposing that crude made offshore will sell at an average of $105 a barrel throughout most of the year, a rate that is below last year’s projected target of $124 per barrel. Brent, the oil variety that both Newfoundland and Labrador follow closely, never reached that rate in the past 12 months. A main ingredient in the year to come is increased output, to around 85.2 million barrels for the fiscal year of 2013-2014. While that is greater compared to the past year, output is lower versus the past couple of years, when around 96 million oil barrels were produced.

According to the finance minister, the government has depended on the Offshore Petroleum Boards of Canada-Newfoundland and Labrador in making its projections on the quantity of oil that operators anticipate to extract. Kennedy admitted that the government has not been happy with fluctuations in its estimates, since majority of its revenues depend on oil.

In the meantime, Kennedy said that the government sought advice from many people prior to setting its current oil price projection. Furthermore, he said that he himself would be comfortable at a $100 per barrel oil price.

Kennedy rejected negative oil price projections which several analysts recently say may drop to a low of $50 per barrel.

By: Chris Termeer

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

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