In the red: Oil prices are plunging and that could be a drag on Canadian GDP in the quarters to come. The wider Canadian economy will soon start feeling the pain being endured by Alberta oil producers for the past few months, and that should give the Bank of Canada reason to pause before plotting its next move, according to two of the country’s major banks. Most Canadian oil producers put up a strong show in the third quarter, but warned of production cuts and lower spending as their barrels are fetching roughly a third of the global prices due to pipeline shortages. “More immediately, production is being curtailed in Q4 in an effort to alleviate pressure on the differential from pipeline and rail bottlenecks,” Avery Shenfeld, chief economist at CIBC Capital Markets wrote in a note to clients Friday. “There will therefore be negative real GDP impacts beginning in the current quarter and extending into next year, as well as hits to the nominal trade and current account balance.” Canadian heavy oil benchmark Western Canada Select was trading at a US$42 discount to West Texas Intermediate on Friday, according to Bloomberg data. Canadian Natural Resources Ltd. plans to […]
