Oil sands cuts help sow seeds of oil price rebound

CALGARY, Alberta (Reuters) – Suncor Energy Inc’s (SU.TO) decision to halt to its C$20.6 billion ($16.2 billion) oil sands expansion because of low oil prices points to an inevitable outcome — high oil prices.

Suncor took a sharp knife to its plans after saying just three months ago that it was merely slowing down spending on the Voyageur project in northern Alberta that would add 200,000 barrels a day of output by 2013.

The clawback by Canada’s No. 2 oil sands producer is the most drastic yet in a North American energy industry that has been busy lowering expectations since September, when the slide in crude prices took hold along with the global recession.

… “The problem now is a lot of that longer-dated supply is now being delayed and deferred,” Edward Jones analyst Lanny Pendill said. “But, at some point, demand is going to resurface and we might have the worst storm hit again, possibly two or three years down the road, and see a rebound in oil prices.”

Reuters