May 16 (Bloomberg) -- Canadian heavy oil prices weakened in light trading on the spot market on the last day of index trading for June deliveries.
Western Canada Select heavy oil shrank by 50 cents to an $18.75-a-barrel discount with two trades logged as of 11:08 a.m. Eastern time, according to Net Energy Inc., a Calgary oil broker. June index trading, where price averages are set for grades to be delivered to buyers the following month, began on May 1 and ends today.
Syncrude, a light crude from oil-sands bitumen processed in an upgrader, weakened by 15 cents to a 50 cents-a-barrel premium to U.S. West Texas Intermediate crude with three trades logged as of 11:43 a.m. in New York, Net Energy said.
The index period begins on the first of the month and ends a few days before shippers nominate volumes to flow on export pipelines to the U.S. The majority of Canadian spot-oil trading occurs during the period.
Syncrude’s premium over WTI rose in April to a six-month high of $10.80 a barrel before dropping closer to average levels in May. Syncrude’s rise coincided with what Valero Energy Corp. Chief Development Officer Gene Edwards said yesterday was a shortage of light crude in April for Gulf of Mexico refineries.
“We had a squeeze going on about a month, six weeks, ago, as everybody anticipated the Seaway expansion bringing more light, sweet crudes to the Gulf Coast,” Edwards said at the Citi 2013 Global Utilities and Energy Conference in Boston. “When Seaway did not deliver as many barrels as they thought it would, it caused sweet crude to become very tight.”
Enterprise Products Partners LP expanded the size of the Seaway crude oil pipeline to 400,000 barrels a day on Jan. 11, but said in February a bottleneck near the end of the line would cause it to operate below expected capacity.
Western Canada Select traded at an 18.9 percent discount to WTI today, close to the long-term average level needed to make Canadian heavy crudes competitive, TD Securities Inc. Commodity Strategist David Bouckhout said in a phone interview yesterday.
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