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The transportation choke-hold on Canada's oil shipments is loosening its grip. And that might provide some much-needed breathing room for the entire Canadian economy.

Canada's international trade balance report for January, released Thursday morning, showed a narrowing of the country's trade deficit in January to $237-million, thanks to a healthy rise in exports. And the biggest contributor to that, by far? Energy products.

Statistics Canada said exports of crude oil and bitumen (oil sands crude) surged 9.5 per cent in the month, "almost entirely on higher volumes." In fact, it said, volumes of crude and bitumen exports have now risen for three straight months.

Hang on a sec – aren't these the same products that have been the subject of massive hand-wringing among oil producers, economists and political leaders, as a lack of pipeline capacity for Alberta oil sands crude sent exports and prices into a severe funk? Hasn't no less an authority than the Bank of Canada cited this as a key contributor to the country's economic malaise?

Even as the noise surrounding the oil-transportation problem rages on – indeed, the Bank of Canada just this week repeated its concern that "persistent transportation bottlenecks are leading to continued discounts for Canadian heavy crude oil" – the numbers suggest the problem itself has quietly faded. Not only do the trade numbers show that volumes of crude and bitumen leaving the country have reached record highs, but the deep price discounts for oil sands crude aren't so deep any more.

Western Canadian Select – the main grade for oil sands crude – is priced about $23 (U.S.) a barrel cheaper than West Texas intermediate, North America's primary crude benchmark. While that price spread is still considerably higher than the 10-year average of about $16 a barrel, it's a vast improvement from the $40-plus spreads that hit oil sands producers just two months ago.

Between the volume and the price recovery, it's clear that Canada's oil industry is overcoming its transportation problem, at least in the short term. Demand from a strengthening U.S. economy is helping, while the expansion of rail shipments has provided an effective way around the lack of pipeline capacity.

The result? Suddenly, oil exports look like a potential contributor to economic growth in Canada, rather than a worrisome drag on growth. For an economy sorely in need of a lift, this couldn't come at a better time.

David Parkinson is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here for more of his Insights, and follow him on Twitter at @ParkinsonGlobe .

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 18/03/24 4:00pm EDT.

SymbolName% changeLast
CNQ-T
Canadian Natural Resources Ltd.
+1.1%99.36
ENB-T
Enbridge Inc
+0.06%48.09
SU-T
Suncor Energy Inc
+0.61%49.16
TRP-T
TC Energy Corp
+0.06%54.52

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