Canada Heavy Oil Gains as Pipeline Space Freed by Syncrude WorkEdward Welsch
Canadian heavy crude oil strengthened on the spot market as an accelerated maintenance schedule for an oil-sands plant freed space on export pipelines.
The 350,000-barrel-a-day Syncrude upgrader in Alberta began a 50-day maintenance turnaround on a coker earlier than expected this week. Light oil prices surged on June 10 after the work schedule was released. Heavy oils have continued to climb as the work means there will be less competition for pipeline space.
Western Canada Select heavy oil strengthened for a ninth day, rising against U.S. benchmark West Texas Intermediate by 65 cents a barrel to a $9.35 discount, according to Calgary oil broker Net Energy Inc. It was the narrowest discount for WCS this year, according to data compiled by Bloomberg. The discount was $41.50 on Jan. 14.
The Syncrude work was moved up from the second half of the year after a malfunction at a boiler in May cut the plant’s output, Canadian Oil Sands Ltd., the project’s largest owner, said in a June 10 statement.
Syncrude oil weakened by 25 cents to a $12.50 premium to WTI, Net Energy said. The grade surged $8.25 a barrel on June 10 after the plant work was announced.
Both grades have gained on the expectation of falling U.S. crude supplies and rising demand as refineries increase output for the summer driving season, which runs from the last weekend in May until the Labor Day weekend in early September.
Exxon Mobil’s Joliet, Illinois, refinery is expected to restart this month after maintenance that began in mid-April. BP Plc’s Whiting, Indiana, plant is said to be planning to finish converting a crude unit to process heavy crude this month as well. The Joliet plant can process 238,000 barrels a day and Whiting 420,000.