The Canadian oil industry could lose more than $2.1 billion (£1.3bn) this year.

That’s according to a new report by research institute, the Conference Board of Canada.

The fall could happen due to a “sharp and prolonged weakness in prices”. Last year the industry made a profit of $6 billion (£3.91bn), however now, prices are expected to remain weak in the near term, as supply exceeds demand.

The report says the “weaker economic growth prospects” and the “ongoing trend of decreasing oil intensity” means the outlook for global demand for oil has weakened.

Crude oil prices are expected to start recovering next year but are not expected to return to their 2014 levels during the next four years, it predicts.

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

“However, these 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.”

Last week Royal Dutch Shell has announced it will not continue with the construction of an oil sands project in Canada.