Canada Syncrude Weakens for Fourth Day on Rising Midwest Supply

Canadian Syncrude weakened for a fourth day on speculation that light oil supplies in the U.S. Midwest will increase.

Upgraders in Alberta and Saskatchewan are expected to ramp up production this month after maintenance. Output from the Syncrude plant near Fort McMurray in Alberta, rose 39 percent last month to 291,000 barrels a day repairs were finished at the end of August, according to Canadian Oil Sands Ltd (COS), the largest owner of the project.

Syncrude for November delivery, a benchmark for light oil produced in oil-sands upgraders, weakened by 25 cents a barrel to a $12.75 discount to U.S. West Texas Intermediate crude, according to Calgary oil broker Net Energy Inc.

Crude oil inventories in PADD 2, which covers the Midwest, increased 665,000 barrels last week to 97.5 million, government data show. It was the second consecutive increase after 12 weeks of declines. North Dakota output jumped 6 percent in July to a record 874,460 barrels a day. Bakken crude, a light, low-sulfur oil primarily from that state, has dropped this month to a $13.75 discount from $10 at the end of September, according to data compiled by Bloomberg.

Supplies are also rising as U.S. refinery demand weakened, according to the Energy Information Administration. The U.S. refinery utilization rate slid 3.5 percentage points over the past two weeks to 89 percent, the EIA, the Energy Department’s statistical arm, said yesterday.

Seasonal Maintenance

Refiners typically cut back output or shut for maintenance at this time of year after boosting production during the summer driving season. Current rates are still more than 5 percentage points above the five-year seasonal average, according to EIA data.

Western Canadian Select heavy oil strengthened by 25 cents a barrel to a $33.50 discount to WTI, NetEnergy said. The WCS discount widened this week as there wasn’t enough pipeline space available to connect supply to markets south of Chicago.

The Enbridge Inc. (ENB) Spearhead pipeline from Flanagan, Illinois, to Cushing, Oklahoma, received requests to ship 1.48 million barrels a day with only 175,858 barrels a day of space available, the Calgary-based company said on Oct. 2.

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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