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Notley blamed the oil price gap on the federal government's failure to build pipelines resulting in the province producing 190,000 raw crude oil and bitumen barrels per day that can not be shipped out.

The bottom has fallen out of the Canadian oil market this year ever since the Federal Court of Appeal overturned a decision by the central government to approve the Trans Mountain pipeline, which drove the Canadian oil discount to new highs relative to its U.S counterpart West Texas Intermediate.

They will remain in place, dropping over time, until a backlog of about 35 million barrels of already processed oil has been shipped to market, which the government expects to take three months.

The Western Canadian province of Alberta this week announced mandated temporary oil production cuts, a rare move aimed at bolstering sagging crude prices caused by rising production that has outstripped pipeline capacity and led to a glut in storage.

"Investors will definitely worry that this is a slippery slope, and that the government can curtail production or interfere in business to pick winners and losers", Ollenberger said in an interview.

David MacNaughton says no one in the US government has raised Alberta Premier Rachel Notley's move with him.

"What we now have is a serious glut in oil, which can't be resolved until OPEC gets together on Thursday and decides to cut back along with Russian Federation and a few other producing nations".

In early trading Monday, Cenovus Energy Inc. rose as much as 13 per cent over its Friday close to $11.11, while Canadian Natural Resources Ltd. rose as much as 16 per cent to $38.74.

Notley is meeting with her cabinet to issue the necessary orders to direct oil producers to begin backing off on oil production by 8.7 per cent starting January 1.

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Alberta Premier Rachel Notley and her cabinet have put the legal wheels in motion to begin cutting oil production. Crude by rail will narrow the differential, but not as much as pipelines.

Notley called the production cut a hard decision because there is not consensus in the industry.

So, Notley's short news conference Sunday evening was a bravura performance. Once excess storage is drawn down, the production cut will drop to roughly 95,000 barrels daily through the end of 2019.

"That said, we understand the actions being taken in Alberta and will be working with our industry partners to ensure Saskatchewan is not undermining these efforts".

Moe said the province will continue to advocate for the federal government to create a long-term solution by building pipelines so both provinces can "sell our oil for what it is worth".

While producers said they would comply with the mandatory cuts, executives from Canada's Suncor Energy Inc., Husky Energy Inc. and Imperial Oil, integrated producers with domestic refinery and upgrading capacity, expressed disappointment. Saskatchewan has no oilsands in active production and we are more diverse in what we produce. The government estimates Alberta is losing $80 million a day due to the discount.

Above: Price of Central Alberta blend of oil.

"We trust that the agenda for our upcoming First Ministers' Meeting can be revised to better reflect the need for a substantive discussion on issues of critical importance to the Canadian economy", it says.


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