August 3, 2018


  • Benchmark NY oil prices averaged $67.97/barrel in Q2 2018 vs $48.33/barrel Q2 2017.
  • The Petroleum Services Association of Canada (PSAC) says Canadian companies are not able to gain from higher world prices because pipeline capacity is inadequate to bring products to market.
    • Alberta had 218 active drilling rigs during February 2018 (down 7.6% Y/Y), vs 119 in 2016 and 403 in 2014.
    • Alberta crude rail exports are up over 50% (Y/Y) to a record of nearly 199,000 bpd.
    • Western Canadian Select’s discount to WTI increased to $30.80, the largest discount since December 2013.
  • As of June 30, Precision Drilling Corp had 78 rigs of its 103 fleet operating within the US but only 60 of 136 operating from its Canadian fleet.
    • US operations have recovered about 80% from their peak in 2014, though Canadian operations remain at less than 40% of their peak.
  • OPEC’s overall output jumped by 300,000 bpd last month.
    • Saudi Arabia increased production by 230,000 bpd M/M to 10.65 million bpd.
    • Russia increased production by 148,000 bpd M/M to 11.215 million bpd.
  • Mexico President-Elect, Obrador, announced a $9.5 billion investment plan to reverse the decline in oil production from 3.4 million bpd in 2005 to 1.88 million bpd in the H1 of 2018.
    • Obrador pledged to increase production by 600,000 bpd in 2 years.

Canadian Carbon Levy

  • Ottawa will drastically reduce the scope of its planned carbon tax to address competitiveness concerns as it prepares to replace Ontario’s cap-and-trade system with its own levy.
    • The levy will start at $20/ton in January, rising to $50/ton in 2022.
  • Firms producing 50 megatons of carbon dioxide will not face any penalties until emissions reach 80% of the industry average, up from 70%.
    • The limit will rise to 90% in four industries facing “high” competitive risks.
  • Companies are expected to try to pass on any costs to consumers.
  • In Alberta, a carbon tax at 50$/ton will have an approximate cost of $1,000 per family of 4.

Economic data

  • Canada’s real GDP rose 0.5% in May. Will grow approximately 3% in Q2 vs BoC estimate of 2.8%.
    • US Q2 GDP reported at 4.1%.
    • 19 of the 20 broad industry sectors increased output. The only sector seeing a decline was utilities.
  • US private sector saw compensation costs rising 2.9% (Y/Y) in Q2, highest since 2008.
  • US July 2018 employment growth slowed to 157,000 (vs est. 192,000), down from 248,000 in June 2018.
    • Full-time position of total employment has risen to a decade high of nearly 83%.
    • Annual growth in hourly earnings remains unchanged at 2.7%.
    • Unemployment deceased to 3.9%, down from 4.0% in June 2018.


  • Calgary is estimating the cost of hosting the 2026 Winter Olympic Games at $4.6 billion vs $13.1 billion in Pyeongchang.
  • AIMCo, Canadian Pension Plan Investment Board, and WPT Industrial REIT have formed a joint venture to create a portfolio of industrial properties in US markets, investing up to US$1 billion.
  • China is now 3rd largest stock market, after Japan. Chinese yuan decreased more than 8% against USD in the past 6 months.
  • Toronto GTA house sales rose 19% (Y/Y) in July 2018 to 6,961 vs 5,869 Y/Y. Vancouver house sales fell 30.1% (Y/Y) in July 2018 to 2,070 vs 2,960 Y/Y.
  • The Bank of England raised its benchmark interest rate to 0.75% up from 0.5%, the highest level since 2009.