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Heavy crude discount grows wider as stockpiles grow

Don Horne   


The Canadian heavy oil discount widened slightly this week against the West Texas Intermediate (WTI) benchmark as growing crude stockpiles continued to exceed capacity to move product out of Alberta.

Western Canada Select (WCS) heavy blend crude for April delivery in Hardisty, Alta., settled at $25.50 a barrel below the WTI benchmark crude price, according to Shorcan Energy brokers, compared with Monday’s settle of $25.25.

Concerns over growing surplus in the Canadian crude market, with storage levels rising versus last year, are keeping the discount deep in the near term, Tim Pickering, chief investment officer at Auspice Capital Advisors, told Reuters.

The glut of stranded barrels in Western Canada is expected to remain until a deal is reached between shippers and rail companies to move more Canadian heavy crudes to the U.S. Gulf.


An expected return of TransCanada Corp’s Keystone pipeline to full pressure, following a November leak, would help reduce the discount, traders have said.

Light synthetic crude from the oil sands for April delivery last traded at $2.15 over WTI, a smaller premium than Monday’s settle of $3.

Efforts to ease the glut of oil sands crude have been witnessed by a cargo of heavy crude that was sent to China after being railed to a terminal in Portland, Oregon, according to U.S. Census data and people with knowledge of the situation, reported in a recent Bloomberg article.

Census data showed that the January export out of Portland to China totaled 243,879 barrels of foreign crude; and that oil was listed as having an API of under 25, indicating it was heavy oil, like the type produced in the Canadian oil sands.



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