Canadian Crudes Weaken on Plant Maintenance in Canada, Midwest

Canadian oil prices weakened on the spot market prior to maintenance at plants in Canada and the U.S. Midwest.

Two upgraders in Alberta are scheduled to shut down for work, and units at two Midwest refineries are expected to be offline this month.

Western Canadian Select, a blend of oil-sands bitumen and heavy conventional crude, weakened by 50 cents to a $25.75-a-barrel discount to U.S. benchmark West Texas Intermediate as of 2 p.m. New York time, said Calgary oil broker Net Energy Inc. It was the widest discount for WCS since March 5, according to data compiled by Bloomberg.

“I think what we’re seeing is that the downtime on the Husky upgrader,” along with Suncor Energy Inc. (SU)’s Unit 2, “is being priced in,” said Judith Dwarkin, chief energy economist for ITG Investment Research Inc. in Calgary. “When upgraders are down, that reduces the demand for bitumen.”

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

Also in Alberta, Royal Dutch Shell Plc is shutting down the 97,870-barrel-a-day Scotford refinery near Edmonton work this month, a person familiar with the matter said July 30.

In the U.S. Midwest, Northern Tier Energy LP (NTI)’s 74,000-barrel-a-day St. Paul Park refinery in Minnesota plans to halt a fluid catalytic cracker during October, the company said during its earnings conference call in August.

BP Plc (BP/)’s Whiting, Indiana, refinery will shut a 75,000-barrel-a-day crude unit for 30 days of repairs starting in the third week of September, according to IIR Energy, a Sugar Land, Texas, energy information provider.

Syncrude, processed from oil-sands bitumen, was unchanged at a $1.10-a-barrel discount to WTI, Net Energy said.

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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