Premier Notley of Canada's oil-rich Alberta province orders companies to cut oil production by 8.7% beginning Jan. 1 in an attempt to lift depressed prices.
The government says oil producers are making 190K bbl/day of raw crude oil and bitumen more than can be shipped out of Alberta, caused mostly by a lack of pipeline infrastructure to carry oil to refineries and new markets; as a result, the price of a barrel of Western Canadian Select has been trading at a sizable discount vs. U.S. benchmarks.
Notley's move directs oil producers to cut a total 325K bbl/day of raw crude oil and bitumen until the glut is drawn down, or the equivalent of an 8.7% reduction in output, then the cut is set to drop to an average 95K bbl/day until year-end 2019, when the new rules expire.
Cenovus Energy (NYSE:CVE) CEO Alex Pourbaix, among the most vocal in calling for government mandated cuts, praises the move, saying "these are not ordinary circumstances" - CVE +5.4% pre-market.
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