Canadian light oil prices retreated from a six-month high on the spot market reached last week as production slipped and refineries prepared for maintenance.
Syncrude, a light oil produced from oil-sands upgraders, weakened 25 cents for May delivery to a $9 premium to U.S. West Texas Intermediate, according to Calgary broker Net Energy Inc.
Syncrude’s premium reached a six-month high of $10.80 last week. Suncor Energy Inc. said it will perform a seven-week turnaround at its 350,000-barrel-a-day Fort McMurray, Alberta, upgrader in April and May, and Canadian Natural Resources Ltd. said it plans to shut down its 110,000-barrel-a-day Horizon upgrader for 18 days in May.
Canadian heavy oil prices kept strengthening amid a seasonal decline in production from Alberta and delays in new production from Imperial Oil Ltd.’s Kearl oil-sands project.
Western Canada Select, a heavy blend of diluted oil-sands bitumen, strengthened by 35 cents to a $12-a-barrel discount to WTI, according to Net Energy data. It was the smallest gap since Oct. 4, according to data compiled by Bloomberg. WCS prices also surged last spring, narrowing their discount to $12.75 on May 1.
Canadian oil rig counts dropped by 30 to 117 last week, down from this year’s high of 509 during the week ended March 1, Houston oil field-services company Baker Hughes Inc. said April 5. Canadian energy activity typically dips in April during the so-called spring breakup, when warmer weather turns roads and drilling sites in remote areas to mud, slowing production.
Delays in the startup of the 110,000-barrel-a-day Kearl project in northern Alberta also supported heavy oil, as the expected increase in supply in Alberta is put off.
“We expect production of diluted bitumen to commence in the coming days,” Pius Rolheiser, a spokesman for Exxon Mobil Corp.’s Calgary subsidiary Imperial Oil, said in an e-mail today.
The project, scheduled to start earlier this year, was hampered by unusually cold winter weather. Rolheiser said in an e-mail on April 1 the company expected production “to commence in the next few days.”