OTTAWA—Facing prolonged weakness in crude prices, Canada’s oil industry is expected to post a pre-tax loss of $2.1 billion this year, according to a new Conference Board of Canada report.

“While Canadian oil companies have acted swiftly, delaying capital investments, cutting expenses, and reducing employment levels, profitability has plummeted,” Michael Burt, director of Industrial Economic Trends at the Conference Board of Canada, said.

“Cost-cutting efforts should begin to bear fruit next year, as the industry is expected to slowly return to profitability, even as oil prices remain low by recent standards,” Burt added.

Though the report notes global demand for oil will be limited by weaker economic growth prospects, the Canadian oil industry is expected to bounce back and continue growing over the next five years as capital investments continue—albeit at a slower pace.

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Meanwhile, the supply of oil is expected to continue to exceed demand, keeping crude prices weak in the near term. The U.S. Energy Information Administration and the International Energy Agency have forecast the growth in crude oil demand is expected to decelerate over the next few years, rising by an annual average of 1.1 million barrels per day, compared with 1.5 MMb/d from 2010-2014.

“Crude oil prices are expected to start recovering next year, but are not expected to return to their 2014 levels over the next four years,” the report says.

As a result of the weak environment, oil industry revenues are expected to fall 22 per cent this year, before beginning to recover in 2016. The sector’s revenue is then expected to grow at an average rate of 14 per cent per year from 2016 to 2019.

So, while Canada’s oil industry will endure the low price environment and pull out of the red, it is unlikely to return to the same explosive growth seen in previous years.