Depth of pandemic's impact on oilpatch in 3rd quarter revealed in report

A new report from Statistics Canada this week is revealinghowmuchthe country's oilproduction and crude exports were hit thissummer as the fallout fromCOVID-19 helped sinkfuel demand.

From July through September, production of crude oil and equivalent products fell more than 10 per centyear-over-year to61.2million cubic metres the lowest level of third-quarter production in four years.

The biggest factor for theplunge was adrop in oilsands extraction, which declinednearly 13 per cent. The report pointed to weak demand and delayed maintenance at some oilsands facilities as reasons for the decrease.

"Notably, the average monthly production since April was10.9 per cent (2.5million cubic metres) lower compared with the same period in2019," the report adds.

Exports of crude oil and equivalent products were downnearly10 per centcompared with the same quarter in2019 as demand for Canadian crude oil from the United States remained low.

In September alone, exports of crude oil and equivalent products fellnearly nine per cent to15.9million cubic metres during the month to the lowest level since February2018.

Demand for fuel over the summer, usually a period of high demand driven in large part byholiday traffic, also continued to slide through the period, according to the report.

Domestic gasoline consumption fell 11per cent in July, 14 per cent in August and six per cent, year-over-year, in September. Consumption of jet fuel fellmore dramatically, down 68 per cent year over year, in September.

The pandemic's economic impact,highlighted by the report,has takena toll on businesses and workers.

The oilpatchhas slashed spending plans and laid off thousands of employees this year as companieshavetried to navigate the fallout of the pandemic. As crudeprices plunged, so did the share values of many oil companies.

Analysts anticipate more mergers within the sector, which is also expected to mean fewer jobs.

Recent figures by the Petroleum Labour Market Information(PetroLMI)say Canada's oil and gas industry employed approximately 170,570workers in November,down seven per cent,or 12,600 workers, from the same month last year.

Hope now is that vaccines for COVID-19 over the coming months will help restore more normal economic activity, including pent-up demand for travel and more commuting traffic.

But even aspositive vaccine news has helped raisecrude prices recently lifting the North American benchmark price to over $45 US a barrelnew surges of the virus and further lockdownscontinue to weigh on prices.