Canadian oil to lose billions in 2016

The Canadian oil sector is projected to lose billions of dollars for the second year in a row as production falls due to lower investment and disruptions from wildfires, a report showed Tuesday.

The Conference Board of Canada's economic report said the sector is on track to post an annual loss of Can$10 billion (US$7.6 billion) this year, following a record loss of Can$11 billion (US$8.4 billion) in 2015.

"Canadian oil producers continue to be challenged by the extended battle for market-share that has kept global crude prices stubbornly low," board economist Carlos Murillo said in a statement.

"For the first time in recorded history, the (Canadian) oil industry is expected to post not only the largest level of losses but also back-to-back consecutive losses," he said.

Canada is the world's sixth largest oil producer, and its sector has been hit hard by plunging crude prices over the past two years.

An Alberta oil sands production stoppage in May due to wildfires sweeping across the region -- which holds the world's third largest oil reserves -- further exacerbated its woes.

Overall production is forecast to fall one percent in 2016. 

Last year, the country produced 3.7 million barrels of oil per day, according to the Canadian Association of Petroleum Producers.

Profitability concerns led to a significant pullback in investment, resulting in lower production levels, said the Conference Board report. From 2014 to 2017, investment in the Canadian oil industry will have been cut by an estimated Can$38 billion (US$29 billion).

Companies as a whole have also been slow to cut costs, as revenues fell.

The Conference Board did offer one glimmer of hope, predicting the industry will return to the black in 2017 if oil prices recover.