Oil differentials set to narrow - eventually
Despite predictions of a landslide victory for the Democrats, Republicans have won control of the House, Senate and 1600 Pennsylvania Avenue. Trump has promised to overturn each of Obama's executive orders on his first day in office, including the President's veto of the Keystone XL pipeline.
Washington insider Joe McMonigle (former Department of Energy chief of staff under President Bush) thinks that "Keystone is going to be one of the very first actions that President Trump will take after the inauguration ... It's a very simple approval for him, a quick reversal of an Obama policy and quite easy for him to do. I think it's something he does in the first week, if not the first two or three days."
TransCanada says they "remain fully committed to building Keystone XL.” The University of Calgary estimates the 830,000 bbl/day pipeline will shrink the heavy oil discount to US$5-6/bbl, down substantially from the current US$14-15/bbl.
The US election also squashes any hope of a veto on the Dakota Access Pipeline, which is still awaiting a federal permit for a section of pipe under a river crossing. Dakota Access will transport Bakken crude from land-locked North Dakota, which should also reduce the differential for tight-oil.
Analysts at Jefferies & Co are speculating that less regulation around fracking and lower corporate taxes will benefit onshore shale recovery the most. Trump's economic advisor Wilbur Ross has assured markets that any changes, including increases in US oil production, will be gradual and not abrupt.
Alberta Premier Rachel Notley says the election changes nothing and her government remains committed to diversifying the economy, pipeline access to international markets (ex-US) and combating climate change.
The transition of power takes effect January 20, 2017.