Canada Oils Weaken as U.S. Economic Data Points to Lower Demand

Canadian crudes weakened on the spot market as U.S. economic data pointed toward lower fuel demand.

U.S. retail sales fell 0.4 percent last month, the Commerce Department said, while a gauge of U.S. consumer sentiment fell to a nine-month low. U.S. crude stockpiles also increased to a 22-year high last week, according to the Energy Information Administration’s April 10 report, potentially diminishing demand for Canadian shipments.

Western Canada Select, a heavy oil blend of oil-sands bitumen, weakened by 20 cents a barrel to a $14.50 discount to U.S. West Texas Intermediate oil, according to Calgary oil broker Net Energy Inc. Syncrude, a light oil produced from oil-sands upgraders, weakened by 25 cents to a $6.25 premium to WTI, Net Energy said.

Both Canadian grades are retreating from six-month highs reached earlier this month amid a seasonal decline in output from Alberta during the spring breakup, when drilling and equipment transportation is slowed. Several upgraders that produce light oil from bitumen are also scheduled to undergo maintenance this month and next, which would cut supplies and support prices.

Western Canada Select reached a six-month high versus WTI on April 5, according to data compiled by Bloomberg. The Canadian oil rig count dropped to 83 this week from 509 March 1, Houston oil field-services company Baker Hughes Inc. said today.

Syncrude prices reached a six-month high April 2 on speculation supplies will decline as upgraders that produce the grade are being taken down for maintenance.

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. Royal Dutch Shell said April 4 its 255,000-barrel-a-day Scotford upgrader in Alberta was undergoing planned maintenance.

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