Canadian Crudes Weaken Against WTI as January Trades Open

Canadian crude oils weakened on the spot market on the first day of January index trading.

The average price for exports arriving in the U.S. next month is set during the index period, which runs through Dec. 16. Western Canadian Select, a blend of heavy oil-sands bitumen, weakened by $1.50 a barrel to a $31.50 discount to U.S. benchmark West Texas Intermediate as of 4:31 p.m. New York time, according to Calgary oil broker Net Energy Inc.

WCS strengthened from a discount of $42 on Nov. 5 after BP Plc started up a new coking unit at its 420,000-barrel-a-day Whiting, Indiana, refinery that can process Canadian heavy crude, increasing demand for it. The grade weakened to that level after unplanned shutdowns of heavy crude units at Citgo Petroleum Corp.’s Lemont, Illinois, refinery and Consumers’ Co-Op’s Regina, Saskatchewan, plant.

“We are seeing a little bit of that euphoric response dissipate,” said David Bouckhout, a senior commodity strategist at Toronto-Dominion Bank, said by phone from Calgary. “There’s still a situation where there’s a lot of supply fighting for limited demand.”

Pipeline space is overbooked this month on Enbridge Inc.’s Mainline, the largest crude oil export system in Canada. Canada will produce 1.48 million barrels a day of heavy crude this year and send most of it to the U.S., according to a forecast by the country’s National Energy Board.

The price of Canadian Syncrude, a light oil produced by oil-sands upgraders, weakened by $1.10 a barrel to a $10.10 discount to WTI, Net Energy said.

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