And while Canadian energy exports aren’t being hit by American tariffs, there’s still plenty of fallout from the U.S. trade war. Read More
“There’s a lot of uncertainty around how this is going to impact the global economy”
“There’s a lot of uncertainty around how this is going to impact the global economy”
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Since U.S. President Donald Trump unveiled his “Liberation Day” tariffs to the world this week, the oilpatch isn’t feeling a whole lot of salvation.
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Benchmark U.S. crude prices have fallen by almost 14 per cent since Wednesday. Canadian oil and gas stocks are off 15 per cent.
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And while Canadian energy exports aren’t being hit by American tariffs, there’s still plenty of fallout from the U.S. trade war.
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“People are hitting the sell button first and asking questions later,” said Martin Pelletier, senior portfolio manager at Wellington-Altus Private Counsel in Calgary.
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“There’s a lot of uncertainty around how this is going to impact the global economy and obviously that’s going to drive commodities and demand for commodities, especially oil.”
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On Friday, West Texas Intermediate (WTI) crude futures fell by almost $5 to close just below US$62 a barrel.
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On the Toronto Stock Exchange, shares in MEG Energy dropped 12.5 per cent on Friday, Vermilion Energy fell 15.6 per cent and Baytex Energy was down 17 per cent.
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“The market is fearful of the unknown. It’s uncertain,” said Paul Colborne, CEO of Calgary-based petroleum producer Surge Energy, which decreased 11 per cent.
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“I am surprised by the severity of it, but I do think crude bounces back.”
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Equity markets around the world recoiled as China announced Friday it would respond to the latest U.S. tariffs with its own levies.
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In the U.S., the S&P 500 decreased six per cent and the Nasdaq fell 5.8 per cent, while the S&P/TSX Composite Index dropped by 4.7 per cent.
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The latest market turmoil began after Trump unveiled plans Wednesday for a 10 per cent tariff by the U.S. on all imports, and additional “reciprocal” tariffs on about 60 trading blocs or countries.
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Expectations of retaliatory tariffs from other countries has sparked consternation of an economic slowdown, or possible recession, in the world’s largest economy.
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J.P. Morgan chief economist Bruce Kasman increased the odds of the United States facing a recession to 60 per cent, if a trade conflict is sustained.
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While Canada avoided seeing reciprocal tariffs from the U.S., it still faces previously announced levies on the auto, steel and aluminum sectors.
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The country “is not out of the woods,” ATB Economics wrote in a note.
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“What has happened is the trade war has gone global,” ATB chief economist Mark Parsons said in an interview.