Source: The Canadian Press

A business think-tank sees rosier times ahead for Canadian oil producers, who are expected to reap $8.4-billion in profits this year as the world economy recovers from the recession and energy demand picks up.

“With the global recession giving way to economic recovery, demand for crude is expected to resume a long-term upward trend,” the Conference Board of Canada said in its summer industrial outlook, released Thursday.

Global oil consumption is nearly back where it was before the financial meltdown and prices have almost doubled from the lows they hit last year.

Prices may be higher, but the Conference board notes they’re still well below their 2008 peak and says uncertainty over the recovery and high inventories will limit price increases.

Even so, it predicts Canadian oil companies will fare much better this year after a large drop in oil prices last year reduced profits by 90% to about $1.7 billion.

Canada’s oil producers should pull 4.1% more crude from the ground this year with improvements on the conventional side, the group said.

Most future growth is expected to come from higher oilsands production.

“The exact timing of individual projects remains uncertain; however, with oil prices remaining elevated and several projects already announced, there should be no shortage of new capacity coming online over the forecast,” the report said.

Last year, costs in the industry fell 20% to $67.5 billion, with the biggest drop coming from material costs. The fact that many producers hung on to their workers stopped costs from plummeting further.

“Costs will bounce back this year. With so many projects on the horizon, oil companies will add 3,400 more jobs to their payrolls,” the report said.

Wage growth will slow, but it will still hover above the national average at 3.9%.

“Combined, this will drive labour costs up 10.3% this year,” the report said.