North American oil prices saw a rise of over one percent on Monday following the recent turmoil in Venezuela, while shares of some major Canadian oil and gas companies experienced a decline in early trading. The price of a barrel of West Texas Intermediate, the North American benchmark, closed the day with a 1.7 percent increase, reaching just over $58 US.
Despite the increase, prices are still relatively low, standing approximately $15 lower than a year ago. On the other hand, the stock prices of various Canadian oil and gas firms took a hit. By midday Monday, the energy index of the Toronto Stock Exchange had dropped by about 4.5 percent, recovering slightly by the end of the day to a 3.5 percent decrease.
In early trading, shares of major oil and gas companies in Canada, such as Suncor Energy, Cenovus Energy, and Canadian Natural Resources Ltd., experienced declines ranging from four to seven percent before rebounding later in the day. Venezuela, a significant producer of heavy crude similar to Western Canada’s oil, has raised concerns about its ability to ramp up oil and natural gas production.
Barry Schwartz, chief investment officer at Baskin Wealth Management, expressed worries about Venezuela’s energy production potential, highlighting its significant oil reserves comparable to Canada’s. Despite the decline in Canadian energy company stocks, Schwartz suggested that the negative market response may be an overreaction, emphasizing the substantial time required to rebuild Venezuela’s energy infrastructure for a noticeable production increase.
The removal of Venezuelan President Nicolás Maduro over the weekend has impacted global oil markets due to the country’s vast oil reserves. Although Venezuela produced only about 900,000 barrels per day last year, a significant drop from its peak production of 3.7 million barrels per day in 1970, the country’s oil sector has suffered from years of reduced investments amidst sanctions and ineffective government policies.
While the Toronto Stock Exchange and North American markets experienced an overall increase in value on Monday, concerns persist about the future of Venezuela’s energy industry and its implications on the global oil market.
