Canada’s Oil and Gas Sector Set a Record for Layoffs

37% of oil and gas companies in Canada have been forced to adjust their permanent staff due to the fall in oil prices and reduced demand as a result of the Coronavirus epidemic. These energy companies have taken steps to reduce labour costs across their organizations.

In addition to the reduction of permanent staff, other measures have been taken. 35% of companies stopped the recruitment of new staff, while 29% of them reduced the salaries of executive staff. Workers’ wages faced a reduction of 28%. Moreover,  27% of them adjusted temporary staff, and 21% of them reduced working hours.

Out of Canada’s ten energy workers surveyed in August and September, four said their companies experienced a permanent downsizing. Many other companies had substituted other measures for redundancies. These include negotiating with workers to reduce wages, working hours, and benefits.

Official data show that employment in Canada’s natural resources sector reached a record high of 43,000 in the second quarter of this year. The decline in demand for oil has been the main reason for this shift. Employment in this sector decreased by 7.3% during the second quarter of the year.

Employment in Canada’s oil and gas sector rose 2.78% to 4,452 workers in September from a year earlier and has been on the rise since June 2020.

Oil prices rose on Wednesday for the fourth day in a row

Amid the optimism regarding Covid-19, markets ignored higher than expected US oil reserves, and the prices kept increasing. 

Brent crude rose 54 cents, or 1.1%, to $48.40 a barrel. It was a nearly 4% increase yesterday. West Texas Intermediate rose 47 cents, or 1.1%, to $45.38 a barrel. Both indices have hit a record high since early March, rising about 10% in the past four days.

Now we have three effective vaccines that can fight the coronavirus. However, None of them will be ready for mass use for several months, which means that quarantine and travel restrictions will remain until next year.

This is likely to force OPEC and its allies, including Russia, to extend their current supply constraints in 2021. The decision will be made at next week’s meeting of OPEC and OPEC Plus oil ministers. The group has limited its supply to boost prices. It was a result of weakened demand for oil in many parts of the world. Under the April agreement, OPEC Plus producers will increase production by about 2 million barrels per day in January, equivalent to 2% of global supply.

Part of the market risk comes from the political situation in the United States. President Trump has agreed to begin the process of handing over power to President-elect Joe Biden.