North American crude oil prices surged over one percent on Monday in response to the recent turmoil in Venezuela, while shares of prominent Canadian oil and gas firms experienced declines in early trading. The West Texas Intermediate benchmark saw a 1.7% increase, reaching just over $58 US per barrel by the end of the day.
Despite the rise, prices still remain comparatively low, standing approximately $15 lower than a year ago. On the other hand, various Canadian oil and gas companies faced stock price setbacks. The energy index of the Toronto Stock Exchange dropped around 4.5% midway through Monday, recovering slightly to end the day down by 3.5%.
Major oil and gas companies in Canada, such as Suncor Energy, Cenovus Energy, and Canadian Natural Resources Ltd., witnessed stock declines of approximately four to seven percent in early trading, before recuperating some losses later in the day.
Venezuela’s heavy crude production, akin to Western Canada’s oil output, is a point of concern. Barry Schwartz, Chief Investment Officer at Baskin Wealth Management, highlighted worries about Venezuela’s ability to boost oil and natural gas production due to its significant oil reserves, similar to Canada’s holdings.
Schwartz suggested that the drop in Canadian energy company stocks may be an exaggerated reaction, as significant time and investment would be required to revamp Venezuela’s energy sector infrastructure for noticeable production increases. He emphasized the costly and challenging nature of extracting and refining oil, underscoring the enduring value of Venezuela’s reserves.
The removal of Venezuelan President Nicolás Maduro over the weekend has impacted global oil markets, given the country’s substantial oil reserves. Despite being a former major producer, Venezuela’s oil production dwindled to around 900,000 barrels per day last year, a stark decline from its peak of 3.7 million barrels per day in 1970, attributable to sanctions and governmental mismanagement.
While Canadian energy stocks dipped, the overall Toronto Stock Exchange and North American markets saw an increase in value on Monday.