North American oil prices surged over one percent on Monday in response to the unrest in Venezuela over the weekend, while shares of some prominent Canadian oil and gas firms took a hit in early trading. The price of West Texas Intermediate, the North American standard, ended the day up 1.7 percent, rising about $1 to slightly above $58 US. Despite this increase, prices remain relatively low, standing about $15 below where they were a year ago.
Several Canadian oil and gas companies experienced declines in their stock values. By midday Monday, the Toronto Stock Exchange’s energy index was down approximately 4.5 percent, later slightly recovering to finish the day down by 3.5 percent. Notably, major oil and gas companies in Canada saw drops in their stock prices early in trading; for instance, Suncor Energy dropped about four percent, while Cenovus Energy and Canadian Natural Resources Ltd. plummeted around seven percent before partially recovering later in the day.
Venezuela is a significant producer of heavy crude oil, similar to the type abundant in Western Canada. Barry Schwartz, the chief investment officer at Baskin Wealth Management, highlighted concerns about Venezuela’s ability to boost its oil and natural gas production, given its substantial oil reserves, reminiscent of Canada’s resources.
Despite the decline in Canadian energy company stocks, Schwartz suggested that the reaction may be exaggerated, emphasizing that it could take years to rebuild Venezuela’s energy sector infrastructure to realize notable production increases. He noted the challenges associated with extracting and refining the costly oil reserves but emphasized the long-term value they hold.
The recent removal of Venezuelan President Nicolás Maduro has influenced oil markets due to the country’s substantial oil reserves. Venezuela, once a leading producer, only extracted about 900,000 barrels per day last year, a significant decline from its peak of 3.7 million barrels per day in 1970. While Canadian and North American markets saw overall growth in value on Monday, the impact of Maduro’s removal on the oil sector continues to unfold.