Canada Heavy Oil Discount Widest in 3 Months Ahead of Plant Work

Western Canadian Select heavy oil weakened to a three-month low as plants that use the grade are expected to shut down for maintenance next month.

Two Alberta upgraders, or plants that convert heavy oil into higher quality light synthetic grades, are scheduled to be taken down for maintenance in and around September, lowering the amount of crude they’ll consume. The September index trading period that sets the average price of Canadian grades to be delivered next month ends today.

Western Canadian Select weakened by $2 a barrel to a $24 discount to West Texas Intermediate oil, according to Calgary oil broker Net Energy Inc. It was the widest discount for the grade since May 6, according to data compiled by Bloomberg.

Husky Energy Inc. (HSE)’s 82,000-barrel-a-day Lloydminster upgrader will shut for 45 days starting in early September, executives said on an earnings call last month. Suncor Energy Inc. (SU) said Aug. 1 that it’s planning four to five weeks of maintenance on the 110,000-barrel-a-day Unit 2 at its Fort McMurray upgrader.

Royal Dutch Shell Plc (RDSA)’s 97,870-barrel-a-day Scotford refinery in Alberta also will close for most of September, a person familiar with the matter told Bloomberg on July 30.

WCS barrels for October delivery weakened by 50 cents to a $24-a-barrel discount, Net Energy said. That narrowed the spread versus September to parity.

Syncrude synthetic light oil was unchanged at a $3.60 premium to WTI.

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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