Heavy Alberta Oil Drops to Record Low as U.S. Supplies Increase

Heavy Alberta oil tumbled to a record low against the U.S. benchmark crude as supplies were driven up by increased output, limited pipeline space and a Midwest refinery unit shutdown.

Suncor Energy Inc. (SU) processed the first oil at the Firebag 4 complex, an in-situ steam-assisted gravity drainage operation that was commissioned in the third quarter, about three months ahead of schedule, the company said in a statement Dec. 6. The plant was producing about 130,000 barrels a day by the end of November, Suncor said.

Enbridge Inc. (ENB) said last month that shipments on segments of crude-oil Lines 4 and 67 were apportioned for December in aggregate by 13 percent. BP Plc (BP/)’s Whiting refinery in Indiana shut Pipestill 12, the largest crude unit at the plant, for part of a project that’s expected to be completed by the middle of next year, a person familiar with the situation said Nov. 5.

Western Canada Select, a sour crude blended from conventional, heavy Canadian oils, dropped for the third straight day, declining $3 to a discount of $37 a barrel against West Texas Intermediate at 2:23 p.m. New York time, data compiled by Bloomberg show. That’s the oil’s weakest level since May 2008, when Bloomberg began compiling pricing.

Syncrude Down

Syncrude, a synthetic oil upgraded from tar-like bitumen in Alberta into feedstock for refineries, slid $1 to 85 cents a barrel above WTI, the lowest premium since Dec. 3.

In the U.S. Gulf Coast, West Texas Sour gained 25 cents to a $15.50-a-barrel discount to WTI.

Light Louisiana Sweet’s premium increased 30 cents a barrel to $23.75 above the benchmark, the highest level in more than three weeks. Heavy Louisiana Sweet’s premium rose 25 cents to $23 a barrel.

Poseidon’s premium widened 40 cents to $18.50 a barrel versus WTI. Mars Blend increased 50 cents to $18.25 a barrel over WTI, and Southern Green Canyon gained 90 cents to a $19 premium.

The premium for Thunder Horse, a sour crude with lower sulfur content than Mars, Poseidon and Southern Green Canyon, slipped 40 cents to $19.40 a barrel above WTI.

The spread between WTI and European benchmark Brent crude widened 51 cents to $22.73 a barrel based on settlement prices, the biggest differential since Nov. 28. When Brent’s premium to WTI gains, it typically strengthens the value of U.S. grades that compete with oils priced using the European benchmark.

“The Brent-WTI spread widened today, and that impacts the crude oils that are traded on the Gulf Coast,” Andy Lipow, president of Lipow Oil Associates LLC in Houston, said by telephone.

To contact the reporter on this story: Lynn Doan in San Francisco at ldoan6@bloomberg.net; Aaron Clark in New York at aclark27@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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