Northern Alberta's oil sands account for roughly two thirds of crude output from Canada, which is the world's fourth-largest oil producer. Canadian producers, like their counterparts globally, endured a torrid 2020 as the COVID-19 pandemic hammered fuel demand but cautious optimism that vaccinations will defeat the virus this year is helping boost oil prices.

Data showing an uptick in Canadian oil sands production coincides with a jump in global oil prices this week to an 11-month high, spurred on by a surprise supply cut from the world's largest exporter Saudi Arabia. [O/R]

Data from the Alberta Energy Regulator released this week shows in November oil sands production hit a record 3.16 million barrels a day. That was a month before Alberta government production curtailments, introduced in 2019 to ease congestion on export pipelines, lifted.

Matt Murphy, an analyst with energy research firm Tudor Pickering Holt, said producers were able to bump up oil sands output while staying within curtailment limits by cutting back on their conventional crude production.

Now that curtailments are over, volumes from companies like Suncor Energy, Canadian Natural Resources Ltd and Imperial Oil are likely to climb even further as they look to cash in on stronger oil prices.

"There will be a bit of incremental growth in excess of this record," Murphy told Reuters on Wednesday. "Our model shows the oil sands getting to 3.3 million bpd by the middle of 2021."

The Canadian Energy Regulator forecasts oil sands production to peak at around 4.3 million bpd in 2039, and expects most of that growth to come from expansions to existing facilities.

(Reporting by Nia Williams; Editing by Alistair Bell)

By Nia Williams