Canada Crude Gains on Expectation of Demand Increase at Whiting

Canadian heavy crude strengthened for a second day on speculation that a restart of units at BP Plc (BP/)’s refinery in Whiting, Indiana, will increase demand for imports..

The 420,000 barrel-a-day Whiting plant will bring units back online during the second quarter and commission a new 102,000-barrel-a-day coking unit in the second half of the year, BP Chief Financial Officer Brian Gilvary said during the company’s earnings conference call April 30.

Western Canada Select heavy oil gained 60 cents a barrel to a $21.90 discount to U.S. benchmark West Texas Intermediate, according to Net Energy Inc., a Calgary oil broker.

Gilvary said on the call that the maintenance shutdown at Whiting contributed to a wider discount for Canadian crudes.

WCS prices have regained ground after weakening when a fire broke out May 3 in the coker unit at Flint Hills Resources LLC’s 330,000-barrel-a-day Pine Bend refinery. The grade had lost $5 a barrel between May 2 and May 6, reaching its widest discount to WTI in two months, according to data compiled by Bloomberg.

Jake Reint, a company spokesman based in Rosemount, Minnesota, didn’t respond to e-mails requesting an update on the status of the coker this week. Genscape Inc., an energy research firm, said in a May 3 e-mail that its instruments detected the shutdown of a 24,000-barrel-a-day unit at the Pine Bend refinery.

Syncrude, a light Canadian oil processed from oil sands, weakened by 5 cents to an 80-cent discount to WTI, Net Energy said.

Before the Pine Bend fire, Canadian grades had been weakening from six-month highs reached last month as output slipped because of seasonal plant maintenance and spring thawing that slowed drilling activity. WCS’s discount to WTI was $12 on April 9 and Syncrude was at a $10.80 premium on April 2, according to data compiled by Bloomberg.

To contact the reporter on this story: Edward Welsch in Calgary at ewelsch1@bloomberg.net

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

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