Updated May 2022
Within this section
Price Forecast Cases
Three cases for crude oil prices are presented in this section:
- The base-price case is a reference point based on assumptions, including demand recovery after the pandemic, conflict in Eastern Europe, and an expected supply increase as drilling activity increases.
- The low-price case captures the lower limit of the 90 per cent confidence interval.
- The high-price case captures the upper limit of the 90 per cent confidence interval.
Highlights of 2021
WTI: The West Texas Intermediate (WTI) price increased by 73 per cent, averaging US$67.68 per barrel (bbl) in 2021. The sharp increase was due to increased global demand for liquid fuels (world economies continued their recovery from the pandemic) combined with a relatively slow response in new production.
CLS: The Canadian Light Sweet (CLS) price increased by 76 per cent, averaging Cdn$80.28/bbl.
WCS: The price of Western Canadian Select (WCS) increased by 105 per cent, averaging US$54.90/bbl.
The WCS and CLS price increases mirrored the WTI price increase in absolute dollar terms, but the relative percentage increase of WCS was substantially higher.
Table S1.1 shows historical and forecast prices for crude oil.
Highlights of 2022 to 2031
Geopolitical supply disruptions and the continued uncertainty surrounding COVID-19 variants will affect the near-term forecast for crude oil prices. The short-term forecast will also be affected by the actions of the Organization of the Petroleum Exporting Countries (OPEC) and its allied non-member countries (collectively referred to as OPEC+) (i.e., the duration of production targets and member adherence to those targets), plus the U.S. shale industry's response to the recent relative strength in crude oil prices.
The long-term forecast largely depends on the demand for liquid fuels. In the absence of policies that would reduce fossil fuel consumption, it is too early to predict a rapid decline in crude oil demand.
The forecast for 2022 assumes that crude oil prices will be supported by the conflict in Eastern Europe, OPEC+'s commitment to modestly increase supply, the gradual expansion in U.S. production, and a continued global economic recovery. However, it is expected that supply will catch up with demand by the end of 2022. In 2023 and 2024, the continued growth of crude oil production due to higher prices and increased investment will slightly exceed demand creating price retreats in 2023 and 2024.
- Base-price case WTI: Projected average price is US$95.00/bbl in 2022, weakening to US$83.00/bbl in 2023 and US$77.00/bbl in 2024. From 2025 onwards, the price is projected to increase, reaching US$88.45 by 2031.
- Low-price case WTI: The forecast is US$57.71/bbl in 2022, US$49.92/bbl in 2023, and US$48.76/bbl by 2031.
- High-price case WTI: The forecast is US$156.38/bbl in 2022, US$137.99/bbl in 2023, and US$160.46/bbl by 2031.
- Base-price case CLS: The price follows similar trends as WTI and is projected to be Cdn$113.13/bbl in 2022 before sliding to Cdn$98.07/bbl in 2023 and Cdn$90.40/bbl in 2024. From 2025 onwards the price is projected to increase reaching, Cdn$101.81/bbl by 2031.
- Low-price case CLS: The forecast is Cdn$73.19/bbl in 2022 and is projected to be Cdn$60.51/bbl by 2031.
- High-price case CLS: The forecast is Cdn$174.84/bbl in 2022 and is projected to be Cdn$171.31/bbl by 2031.
- Base-price case WCS: The projected price is US$81.00/bbl in 2022, dropping to US$69.00/bbl in 2023 and US$63.00/bbl in 2024. From 2025 onwards, the price is projected to increase, reaching US$70.45/bbl by 2031.
- Low-price case WCS: The forecast is US$44.09/bbl in 2022 and is projected to be US$34.06/bbl by 2031
- High-price case WCS: The forecast is US$148.80/bbl in 2022 and is projected to be US$145.72/bbl by 2031.
Price differentials: In 2021, the WTI-CLS price differential averaged US$3.89/bbl and the WTI-WCS differential averaged US$12.78/bbl. Figure S1.1 shows price differentials for CLS and WCS relative to WTI.