Canadian Crude Prices Plunge Once Again
(Bloomberg) -- Canadian crude prices are plunging once again as repairs were completed on Alberta’s second-biggest oil sands upgrader and production surged from a new mine.
Synthetic crude, a light grade produced in upgraders, fell Thursday to the biggest discount to West Texas Intermediate futures since December 2013, data compiled by Bloomberg show.
Prices dropped a day after Suncor Energy Inc.’s Chief Executive Officer Steve Williams said at a conference Wednesday that repairs on the Syncrude Canada Ltd. upgrader, which shut after a power disruption in June, were complete and the last of three sections of the plant was ready to start operation. He also said that Suncor’s new Fort Hills oil sands mine was ramping up faster than planned after oil production started earlier this year. The mine is expected to operate at 90 percent of its capacity by October.
“With Syncrude Canada returning to full rates steadily, more stocks are being built up in Western Canada’s storage,” Christopher Jones, associate energy analyst at Haywood Securities Inc., said by phone from Calgary. “Western Canadian Select may be put into storage to make room for Syncrude supplies on pipelines.”
Western Canadian oil inventories rose 4.3 million barrels to a record high of 36.3 million barrels the week ended Aug. 31, according to Genscape.
Meanwhile, BP Plc.’s Whiting refinery in Indiana, the largest in the U.S. Midwest, is said to be scheduled for maintenance this month, reducing demand for Canadian crude. U.S. fall refinery turnarounds are set to be 15% higher than normal through October led by robust Midcontinent activity, Morgan Stanley equity analyst Benny Wong wrote in a note Wednesday. Other plants in Illinois, Michigan and Ohio are also scheduled for fall work.
Edmonton Mixed Sweet crude, a light Canadian grade, plunged $5 to a $16-a-barrel discount to WTI, the biggest discount in data going back to June 2014. The discount of heavy Western Canadian Select, an oil sands benchmark, widened $3.25 to $27 a barrel, the biggest increase in the discount since July 18.
To contact the reporters on this story: Robert Tuttle in Calgary at firstname.lastname@example.org; Sheela Tobben in New York at email@example.com. To contact the editors responsible for this story: David Marino at firstname.lastname@example.org Catherine Traywick.
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