The price difference between Brent and West Texas Intermediate crude will be eliminated in the next two years as the Seaway pipeline eases a U.S. supply bottleneck, Canadian Oil Sands Ltd. Chief Executive Officer Marcel Coutu said.
The reversal and expansion of the Seaway oil pipeline will help relieve excess supplies of crude at Cushing, Oklahoma, Coutu said today at a TD Energy conference in Calgary. Canadian Oil Sands, based in Calgary, owns 36.74 percent of Syncrude Canada, which produced an average of 199,400 barrels of oil a day from its projects last month.
The difference between Brent futures, a benchmark for global oil prices traded in London, and WTI, a U.S. benchmark priced at Cushing, reached as much as $27.88 a barrel on Oct. 14. The price difference for oil delivered in July 2014 is $7.30 a barrel. The spread widened 3.6 percent to $14.94 today, according to data compiled by Bloomberg.
Enbridge Inc. and Enterprise Products Partners LP reversed the Seaway pipeline earlier this year and expects to boost capacity by 250,000 barrels to 400,000 barrels a day by the end of this year. The Seaway pipeline brings oil from the Oklahoma storage hub to refineries on the U.S. Gulf Coast.
Growing oil supplies from shale formations in North Dakota, Montana and Saskatchewan along with stagnant demand for the fuel in the U.S. have reduced WTI prices.