Canada Oil-Sands Fire Strengthens WTI, JPMorgan Says
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The shutdown of Canadian Natural Resources Ltd.’s 110,000-barrel-a-day Horizon oil sands project after a fire may bring benchmark West Texas Intermediate crude back from a “supercontango” and narrow its discount to Brent oil, according to analysts at JPMorgan Chase & Co.
“The loss of this upgrader will further decrease flows to the region, and should lead to a tightening of WTI spreads,” analysts led by Lawrence Eagles said in a note to clients. “It is also important to recognize that there was already a supply bottleneck in Canada before the outage, therefore it is not simply a case of subtracting the capacity of the upgrader from Cushing flows,” the analysts wrote.