Oilsands producers hope to ride out the storm,

Alberta’s oilsands are “on the edge,” a report said Monday as crude prices slumped to a new, six-year low on worries about a sharp deceleration in Chinese demand amid a massive glut in supply.

Oil prices tumbled more than 5 per cent after the U.S. Energy Administration said growth in global production of petroleum has outpaced consumption growth since August 2014.

Traders also worried a slowdown in the mainland Chinese economy may be worse than expected and could drastically slow oil consumption and aggravate the supply imbalance.

U.S. light crude closed down $2.21 or 5.5 per cent at $38.24 U.S. a barrel, the lowest since February 2009 and on top of declines last week that capped the futures contract’s longest weekly losing streak since 1986.

Oil and gas producers dropped to their lowest level in almost four years as Chinese stock markets suffered their biggest one-day drop since 2008.

That cascaded into a huge sell-off in global equities and commodities, with the S&P/TSX index finishing the session at 13,052.74 points — down 420.93 points from Friday’s close.

The price of Texas benchmark light crude dropped on the inventory report, helping push Canada’s benchmark heavy oil to below $24.

The International Energy Agency in its 2015 world energy outlook said lower prices will boost customer demand, but market conditions and the pressure to reduce fossil fuel consumption in the fight against global warming may signal a new sort of rebalancing in a lower oil price future.

A spokeswoman for oil giant Syncrude, however, said the industry has little choice but to ride out the storm.

“Syncrude has been operating for 50 years so we’ve seen several price cycles,” said Siren Fisekci, investor and corporate relations vice-president for Syncrude’s major shareholder Canada Oil Sands Ltd.

“The market will rebalance in time.”

She added that the costs of shuttering production would be prohibitive.

The price for light crude and synthetic bitumen would have to stay low for a very long time before the industry moves beyond cost containment to disinvestment and a roll back of current output, Fisekci said.

Canadian oilsands producers have little choice but to keep producing, Peter Argiris, an analyst at Wood Mackenzie in Calgary told CTV News.

“The problem is these companies just can’t stop producing. They still need to produce, they need to pay their bills, and they need to ensure their bond covenants are not breached.”

Analyst Menno Hulshof said more than three-quarters of Canada’s daily output of 2.2 million barrels of crude from the oil sands is being produced at a loss at current prices.

A report by JBC Energy, meanwhile, said oilsands viability is “on the edge” at current prices, with producers struggling to cover costs.