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The oil industry in Canada, which mainly deals with heavy crude oil steam alias Western Canadian Select (WCS), is being valued less than the Canadian beer industry. This is a situation that has been caused by the ongoing coronavirus scare that has put a lot of people in worry. On Tuesday, March 31, a barrel of WCS was trading at approximately $4.18, almost a dollar below the cost of a bottle of beer in Canada.
Oil Industry in Canada on the Ground
As reported by CNBC, no one could believe until shown the facts, which prompted the CNBC reporter Brian Sullivan to pull out an updated data and post a screenshot. He said:
“I wouldn’t have believed it if I hadn’t seen the screen myself.”
The primary reason for WCS downfall is the coronavirus outbreak. First, it has made many countries lockdown their people to minimize any travels, be it by air or by the road. The WSC crude oil is heavy crude oil compared to other crude oil produced elsewhere. With the little usage of crude oil at the moment, most people now turn to the cheap and in plenty of fine oil like that from Saudi Arabia.
This now leaves the WCS only meaningful and used by the little Canadian market space at the moment. Crude oil storage and oil tankers are resting fully while the market gets flooded by cheap crude oil, which is not much needed by the way.
With people resulting in staying at home in order to help the government control the deadly coronavirus, most are turning to refreshments like beer to foster family and friends bonding time. As a result, the beer demand rises with the little supply at the moment, therefore making the price of beer rise or remain high, in comparison to a barrel of WCS crude oil.
Oil Price Future with Coronavirus
The novel coronavirus, which has infected 693,224 people globally as of March 30 according to the World Health Organization, has drastically pulled the oil industry down to the knees. With the Russians and the Saudi Arabians continuing the production cuts war, the oil industry in small producer countries will continue being affected.
At the time of writing, the situation on the ground is dire and desperate for a quick solution. With pharmaceutical companies still in the clinical trials or human trials, the solution lurks in a year. This leaves the oil industry in the near future at the mercy of the coronavirus pandemic. Price volatility will continue until such a time the current fundamental noise falls.
Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.
