The country’s energy producers, their workers and the economy as a whole will have to wait another year before oil prices can stage something of a comeback, according to a new forecast.
Economists at the Royal Bank of Canada predicted Tuesday benchmark oil prices would rebound to about $60 a barrel by “late” 2016. In the interim, the oil patch and other oil-producing regions of the country should brace for “more cuts,” the bank forecast said.
“Energy companies are likely to continue to pare back investment in 2016,” RBC chief economist Craig Wright and team said.
Still, next year should see a gradual recovery in oil take hold as production levels globally are reduced and “strong” global demand mops up what’s become an historically large glut on the world market, Wright predicted in the bank’s outlook.
“Our forecast assumes that oil prices will rise next year, thereby reflecting a pullback in supply as the sharp drop in the number of active rigs results in lower levels of global output,” the RBC report said.
The price of oil has fallen to a seven-year low this week after the Organization of Petroleum Exporting Countries (OPEC) said it would maintain current production levels for the next six months even as a worldwide supply glut shows no signs of easing.
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