October was a tough month for North American equities as we saw the TSX composite index drop 6.5% and the S&P 500 experienced its worst month since September 2011. Canadian oilfield service equities were hit especially hard this month as our Sequeira OFS Index was down 9.6% month-over-month and down 14.4% year-over-year to the end of October. Contributing to the decrease was a further widening of price differentials for WCS-WTI driven by transportation bottlenecks, pipeline outages, and U.S. heavy oil refining outages.
Fortunately a few bright spots are expected. In the near term, we expect demand to return from refiners as turnarounds wrap up. In the medium term, Enbridge’s Line 3 expansion is expected to provide much needed egress of Canadian crude.