It’s a new year and Alberta’s oil patch is hoping things go better than they did in 2020.

The annual average price of a barrel of West Texas Intermediate (WTI) has not been as low as it was last year since 2003.

The combined effect of lower demand due to the pandemic and the brief, but punishing, price war between Russia and Saudi Arabia saw WTI average just under USD 40 per barrel last year.

Things got so bad that WTI prices went into negative territory (you had to pay someone to take the stuff off your hands) and closed at -$37.63 on April 4.

Oil rallied as the year ended in anticipation of vaccine rollouts and a post-pandemic high was set when WTI closed at $49.10 on December 18. While respectable, the price was still 22 per cent lower than it was on January 6 when WTI had its best close of the year at $63.27.

The Western Canadian Select (WCS) heavy oil benchmark also had a rough year in 2020, posting its lowest annual average since the benchmark was created at the end of 2004. At USD 26.79, WCS ended the year a few dollars below the previous annual low of $29.60 set in 2016 during the previous recession.

If the pandemic is successfully thwarted by the vaccines and global oil demand improves, oil prices should edge higher in 2021. However, other headwinds such as ample supply, rocky relations within the OPEC+ cartel and the ongoing effects of the pandemic on travel and other activities will also be in play.

Today’s trivia question: How many litres are in a barrel of crude oil? (See tomorrow’s Owl for the answer.)