WTI crude differential remains steady despite supply disruptions

Canadian heavy crude’s differential to benchmark West Texas Intermediate (WTI) crude was steady on Tuesday, as global oil benchmarks surged on concerns about supply disruptions following Russia’s invasion of Ukraine.

Western Canada Select heavy blend crude for April delivery in Hardisty, Alta. settled at $13.50 per barrel below the WTI benchmark, according to NE2 Canada Inc, unchanged from the previous day.

An eight per cent jump in the price of WTI to more than $103 a barrel meant the outright price of heavy Canadian crude leapt to nearly $90 a barrel.

Inventory levels in Alberta are still low after production issues back in December and January, said one trading source, while demand is high everywhere.

It was too early to see any impact in the physical market on traders shunning Russian barrels, but that could contribute to more demand for Canadian crude in coming weeks, said Rory Johnston, founder of energy price newsletter Commodity Context.

“After a full week or two of these Russian crude volumes not coming on, we may see more of a bid for Canadian barrels,” Johnston said.

Maintenance season in the oil sands is getting underway, which will contribute to tighter supply. Shell’s Scotford upgrader has a 65-day turnaround beginning in March, while Suncor Energy has maintenance at its U2 upgrader, Firebag, Fort Hills and Syncrude facilities in the second quarter.

Light synthetic crude from the oil sands for April delivery last traded at $3.55 per barrel over the WTI benchmark, up $2.20 from Monday’s settle.