Canada Heavy Crude Gains Strength on Last Day of Index Trading

Canadian heavy crude gained strength on the last day of December spot market index trading.

The average price for exports arriving in the U.S. next month is set during the index period, which runs from Nov. 1 through today. Western Canadian Select, a blend of heavy oil-sands bitumen, gained $1.50 a barrel to a $35.50 discount to U.S. benchmark West Texas Intermediate oil, as of 2:14 p.m. New York time, according to Calgary oil broker Net Energy Inc.

WCS prices dropped to a discount of $42 this month on Nov. 5, the widest spread in 11 months, according to data compiled by Bloomberg. Prices were driven down after fires at Citgo Petroleum Corp.’s Lemont, Illinois, refinery and Federated Co-operatives Ltd.’s refinery in Regina, Saskatchewan, shut down units that process heavy crude.

The grade also slipped as pipeline space was overbooked this month on Enbridge Inc. (ENB)’s Mainline, the largest crude oil export system in Canada. Canada will produce 1.48 million barrels a day of heavy crude this year and send most of it to the U.S., according to a forecast by the country’s National Energy Board.

WCS pared losses after repairs started at the two damaged units and a report Nov. 14 that BP Plc started a new coking unit at its Whiting, Indiana, refinery that will allow it to process more heavy crude.

The price of Canadian Syncrude, a light oil produced by oil-sands upgraders, weakened by 10 cents to a $13.35 discount to WTI, Net Energy said.

Canadian crude shippers will nominate barrels for shipment on Enbridge’s Mainline after the close of spot trading today. Apportionment levels, or overbooked conditions, on the Mainline for December will be released later this week.

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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