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North American oil prices rose more than one percent on Monday following turmoil in Venezuela over the weekend, while share prices of some major Canadian oil and gas companies fell.
By midday, a barrel of West Texas Intermediate, the North American benchmark, was trading about 1.5 percent higher, up nearly $1 at just over $58. Prices remain relatively low and are about $15 lower than a year ago.
Meanwhile, the stock prices of several Canadian oil and gas companies are declining. By Monday afternoon, the Toronto Stock Exchange energy index was down about 4.5 percent.
Shares of the country's largest oil and gas companies are trading lower, with Suncor Energy down about four percent and Cenovus Energy and Canadian Natural Resources Ltd. – by about seven percent.
Venezuela produces heavy oil, similar to the type of oil that is mainly produced in Western Canada.
“Everyone is concerned about how Venezuela will be able to increase oil and natural gas production because they have significant amounts of oil reserves, especially similar to what Canada has,” said Barry Schwartz, chief investment officer at Baskin Wealth Management.
Many Venezuelans in Canada celebrated the capture of President Nicolas Maduro, but excitement was tempered by uncertainty and worry about what U.S. President Donald Trump might do next.
While Canadian energy stocks are falling, Schwartz said this is likely an overreaction, noting that it will likely take years to rebuild Venezuela's energy sector infrastructure before production can increase significantly.
“This is oil that needs to be transported and refined. It's expensive to get it out of the ground. But you can see the longevity of these reserves and their value,” he said.
The resignation of President Nicolas Maduro over the weekend is affecting oil markets as the country has some of the largest oil reserves in the world.
Venezuela was once a major producer, but it had only about 900,000 barrels a day coming out of the ground last year after years of declining investment due to sanctions and failed government policies.
At its peak, Venezuela produced 3.7 million barrels per day in 1970.
Overall, the Toronto Stock Exchange and North American markets were higher on Monday.
