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Canada’s oilpatch is “not out of the woods yet,” says the Petroleum Services Association of Canada, which lowered its 2016 drilling forecast Wednesday to 4,900 wells, down 250 from its original early November prediction.

The association said it is basing its revised forecast on average prices this year of US$38 per barrel for benchmark West Texas Intermediate, Cdn$2.50 per thousand cubic feet for Alberta natural gas and an exchange rate of 72 Canadian cents to the U.S. greenback. In New York, WTI rose 85 cents to close at US$32.30 per barrel on Wednesday.

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“There’s nothing on our horizon indicating anything getting better anytime soon, at least not in this year ahead of us, that’s for certain,” PSAC president and chief executive Mark Salkeld said in an interview, blaming low prices and producer spending cuts on a North American oversupply that has stretched reserve capacity.

“These challenging circumstances are taking their toll on the oilfield services sector just like all other sectors of the energy industry and the effects ripple across all the supporting industries. I’m afraid we are not out of the woods yet.”