The price of oil continued to slide on Wednesday, as the Saudi government said that half of its production had already been restored following the weekend attack.
The Canadian Crude Index fell 48 cents to 43.30 a barrel, while Western Canadian Select lost $3.56 to to $43.84 per barrel. Brent crude, the international benchmark, fell 27 cents to $64.28 per barrel in London, having dropped $4.47 the previous session. Benchmark US crude was down 42 cents to $58.92 per barrel after falling $3.56 on Tuesday.
Crude prices soared more than 14% to Gulf War prices on Monday, when Iraq invaded Kuwait in 1991, following the attack on producer Saudi Aramco’s processing facility in Abqaiq. The attack dropped global output by 5% and Saudi Arabia said it would be restored by the end of the month.
This oil supply has come from the world’s spare supply, much of it also located in Saudi Arabia, has also been greatly depleted.
The most optimistic assessment, according to Bloomberg, sees global spare capacity at 3.9 million barrels per day, including half a million in capacity from the Neutral Zone and spare reserves elsewhere. However, this spare capacity is expected to become very thin, the longer Abqaiq remains offline. There is also roughly 1.67 secret mb/d of surplus capacity in Saudi Arabia, but Bloomberg also added that it would likely need to be processed at Abqaiq, leaving it basically unusable. The United States could also dip into its reserves.
After posting double-digit increases earlier this week, Calgary-based energy firms saw a dip in share prices on Wednesday. Baytex Energy Corp (TSE: BTE),MEG Energy Corp (CSE: MEG),Canadian Natural Resources Ltd (TSE: CNQ) and Cenovus Energy Inc (TSE: CVE) all opened lower.