Canadian Oil Collapses at Cushing
Canadian heavy crude’s price collapsed at the U.S. trading hub of Cushing as refiners shun heavy and higher-sulfur crude for lighter grades that are less expensive to process in refineries.
Western Canadian Select’s discount for December to West Texas Intermediate widened to $9 a barrel at Cushing as of Wednesday, the steepest in about two years, according to NE2 Group data. The discount is about $7 a barrel smaller than the price at the Canadian oil hub at Hardisty, Alberta.
Refiners are seeking oil that’s less dense and has less sulfur to avoid processing it through units that run on hydrogen that’s made with natural gas, the price of which has surged in recent weeks and added as much as $6 per barrel to the cost of processing more sulfurous crudes, according to the International Energy Agency. The price has also weakened at Cushing after a newly-built oil export pipeline called Line 3 increased shipments of Canadian oil to the U.S.
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