But a new report today warns that oil prices are unlikely to bounce back as quickly as they did in 2009, when they plunged to $33 US a barrel but recovered within three years.
That's because both Canada and the U.S. continue to produce more oil in the face of a global glut in crude production.
WTI was trading up $1.46 at $48.97 a barrel on Wednesday. That's down 7.6 per cent since the beginning of the year and less than half the $107 it hit last June.
But the price bounce defies news from the U.S. Energy Information Administration today that crude inventories rose by 8.2 million barrels last week, setting an 80-year high.
Shale oil production
The nine-month slide in oil prices has been caused by a worldwide oversupply of oil, while demand remains soft.
U.S. fracking technology has opened a new source of oil and shale oil producers have responded to the current slump by finding cheaper ways to get their oil out of the ground.
That's one reason why oil won't return to triple digits in the near term, according to a the Conference Board of Canada. The other reason is an increase in oilsands oil.
The Conference Board predicts oil may creep back towards $60 by the end of this year, but is unlikely to surpass $80 by 2019.
"With the technological genie of horizontal drilling and multi-stage fracturing forever out of the bottle, the U.S. industry will be able to respond quickly and increase production if prices reach $80 a barrel again, putting a hard cap on prices," the Conference Board said.
The Conference Board estimates Canadian producers may get about $55 a barrel for their oil this year, reducing their annual revenues by $43 billion.
"This is a new oil market," Conference Board economist Mike Shaw said.
Canada’s oil industry will experience pre-tax losses of $3 billion and cut 8,000 jobs by the end of this year, he predicts.
Break-even prices for oilsands
In Canada, oilsands projects are facing break-even prices for steam extraction in the region of $60 to $80 a barrel. Break-even prices for open-pit mining is even higher at $90 to $100 a barrel.
New projects face even steeper production costs, and that should reduce new investment in the oilpatch to $44 billion, down from $56 billion in 2014.
But because of the long lead time on oilsands projects, Canadian output won't pull back in response to the lower prices.
Instead, overall oil production is expected to increase to 3.8 million barrels per day this year from 3.5 million barrels a day last year, with oilsands output increasing while conventional oil production slows.
"It means really that we're going to see marginal players that just don't go ahead anymore. It's going to be a focus on the best assets," Shaw said.
The IMF estimates Canada spends about $34 billion annually on subsidies for fossil fuel.Suggest a correction