Financial losses by Canadian oil and natural gas producers will shrink but remain painfully high this year, the Conference Board of Canada said Tuesday.

The new forecast anticipates combined 2016 losses of C$10 billion (US$7.6 billion), for a slight improvement from C$11 billion (US$8.4 billion) in 2015.

Red ink generated by poor commodity prices and stubbornly high costs will continue to drive down investment and make production flat-line or even drop slightly, the conference board said. Total Canadian daily output currently runs at about four million bbl of oil and 15 Bcf of gas.

Potential production declines for 2016 are owed to a severe slump in drilling for gas and associated oil-like liquids, and forest fires that temporarily shut down Alberta oil sands plants in May. Oil sands production capacity continues a long-range rise from projects begun before prices went into a tailspin in mid-2014, driving an industry-wide push for new export pipelines to Pacific and Atlantic coast tanker terminals.

The board's forecast adds a corporate financial loss calculation to industry surveys by specialist agencies such as the Canadian Association of Petroleum Producers and the Canadian Energy Research Institute.

The agencies agree that international market and price erosion cut annual capital investment in Canadian oil and gas by about C$38 billion (US$29 billion) or 47% into a current range of C$42-43 billion from C$81 billion (US$62 billion) in 2014.

But the conference board also adds a moderately optimistic note to consensus forecasts of at best a slow recovery. The Canadian industry should go back to running in the black in 2017 because annual average oil prices will begin a steady rise to US$67/bbl as of 2020, enabling corporate cost-cutting and efficiency drives to pay off, the forecast showed.