With global oil prices firmly in bear market territory, it’s perfectly natural to wonder whether the worst is yet to come. Crude’s steady decline over the summer culminated in a sharp selloff earlier this month, a painful reminder of how fast commodity prices can tumble once sentiment comes undone.

Thankfully, crude prices finally found a base of support over the past week, which gives us a welcome reprieve to consider what’s ahead.

There’s no question that the decline in oil prices will have at least some effect on Canada’s economy should they stay at current levels or fall even lower. According to economists with RBC, one-third of private-sector capital spending in Canada is tied to oil.

If prices persist at current levels, some projects could even be tabled until an eventual rebound. In recent months, we’ve already seen some investments in the resource-rich province of Alberta canceled or deferred, including oil-sands projects initiated by French oil major Total SA and Norwegian energy giant Statoil, due at least in part to the high cost of skilled labor in the region.

In fact, the intensive production involved in unconventional oil plays, including Canadian oil sands, means that current prices aren’t all that far away from breakeven levels.

Indeed, a recent report from the International Energy Agency (IEA) observes that nearly 3 percent of global oil production could face cuts if prices fall below USD80 per barrel.

But the situation in the oil sands is more critical than that. Should the price of oil drop below USD80 per barrel for an extended period, then the IEA says as much as 25 percent of oil sands production could be sidelined.

And the Financial Post notes that its review of employment data compiled by Bloomberg shows that crude production in Alberta is responsible for all of the country’s net-employment growth for the 12-month period that ended in July.

None of this has escaped the attention of the Bank of Canada. In its latest quarterly monetary policy report, the central bank said, “The lower level of global crude oil prices and the resulting weaker terms of trade are projected to reduce Canadian incomes and to weigh on household and business spending.”

But before you throw in the towel, there are other factors at play that could offset the worst-case scenarios.

For one, economists with CIBC recently questioned whether the oil supply glut commonly cited in the financial media is based on actual production or projected future production.

That’s a key distinction because falling prices will almost surely lead to a curtailment in future production, at least among higher-cost producers. Of course, many OPEC member nations are reportedly willing to maintain production at current levels simply to hold market share or possibly even win market share from those forced to idle production.

Nevertheless, the net effect of an extended period of lower prices will be a decrease in production.

More important, CIBC points to evidence that the supposed supply glut that’s troubling the market seems to be based on future production. The economists note that industrial country crude inventories remain below their five-year average. And the US Energy Information Administration (EIA) forecasts that inventory levels will remain below this threshold for at least another year.

CIBC also casually mentioned another factor that may have contributed to the cascade in crude prices. We’re currently in the seasonal period when refineries routinely shut down for scheduled maintenance, which dampens demand for crude.

In other words, it’s entirely possible that the magnitude of the crude selloff was overdone.

For now, forecasts for crude prices aggregated by Bloomberg suggest that we could be at an interim bottom. While North American benchmark West Texas Intermediate (WTI) recently traded near USD81.23 per barrel, the average forecast among the nine analysts who’ve updated their projections since mid-October is for WTI to trade just shy of USD90 per barrel in 2015.