Canadian Crudes Weaken on Rising Supplies, U.S. Refinery WorkEdward Welsch
Canadian crudes weakened for a second day on the spot market with some grades trading at their widest discounts to the U.S. benchmark oil in 18 months as supplies rose and U.S. refinery demand began a seasonal slowdown.
The Syncrude upgrader in Alberta said yesterday production rose 39 percent to 291,000 barrels a day in September as it ramped up after maintenance. U.S. refinery utilization rates fell for a second week, the Energy Information Administration said today.
Syncrude, a benchmark for light oil produced in upgrader plants, weakened for November delivery by $1 a barrel to an $11.50 discount to U.S. West Texas Intermediate crude, according to Calgary oil broker Net Energy Inc. It was the grade’s biggest discount since March 14, 2012, according to data compiled by Bloomberg.
Maintenance at the Syncrude upgrader ended Aug. 27. Husky Energy Inc. is scheduled to return the 82,000-barrel-a-day Lloydminster upgrader to service after a 45-day turnaround and Suncor Energy Inc. plans to finish work at one of its two Fort McMurray upgraders.
The U.S. refinery utilization rate slid 3.5 percentage points over the past two weeks to 89 percent, the EIA, the Energy Department’s statistical arm, said. Refiners typically cut back output or shut for maintenance at this time of year after boosting production during the summer driving season. Current rates are still more than 5 percentage points above the historical average, according to EIA data.
Western Canadian Select heavy oil weakened by 95 cents a barrel to a $32.85 discount to WTI, Net Energy said. It was the widest discount since Jan. 24, according to data compiled by Bloomberg, and compared with a 12-month average discount of $23.44 a barrel.