{"id":11299,"date":"2022-10-14T14:58:10","date_gmt":"2022-10-14T14:58:10","guid":{"rendered":"https:\/\/ambassadornews.org\/?p=11299"},"modified":"2022-10-14T14:58:26","modified_gmt":"2022-10-14T14:58:26","slug":"price-gap-on-heavy-canadian-oil-tops-30-per-barrel-widest-spread-since-2018%ef%bf%bc%ef%bf%bc","status":"publish","type":"post","link":"https:\/\/ambassadornews.org\/en\/price-gap-on-heavy-canadian-oil-tops-30-per-barrel-widest-spread-since-2018%ef%bf%bc%ef%bf%bc\/","title":{"rendered":"Price gap on heavy Canadian oil tops $30 per barrel, widest spread since 2018\ufffc\ufffc"},"content":{"rendered":"\n<p class=\"has-text-align-left\">?Oil is going for $90 US a barrel right now. So why is Canadian oilsands crude going for under $60<\/p>\n\n\n\n<p class=\"has-text-align-left\">A barrel of the North American oil benchmark is changing hands for about $90 US a barrel right now, but the heavy crude that comes from Canada&#8217;s oilsands is fetching $30 less because of a perfect storm of imbalances between supply and demand<\/p>\n\n\n\n<p class=\"has-text-align-left\">The oil blend known as West Texas Intermediate (WTI) was going for about $87 a barrel on Thursday. That&#8217;s down from recent highs, but still far more than the price offered for every barrel of crude oil from Canada&#8217;s oilsands, a thick, tarry, and\u00a0<q>sour<\/q>\u00a0type of crude that goes by the name Western Canada Select (WCS)<\/p>\n\n\n\n<p class=\"has-text-align-left\">WCS\u00a0was fetching a little over $53 US a barrel on Thursday, the cheapest level it&#8217;s been since\u00a0Russian President Vladimir Putin invaded Ukraine,\u00a0which\u00a0<a href=\"https:\/\/www.pressreader.com\/canada\/cbc-edition\/20220226\/281762747706148\" target=\"_blank\" rel=\"noreferrer noopener\">pushed oil prices to their highest level in years\u00a0(new window)<\/a>\u00a0on fears of a wider war, and sent countries scrambling to replace sanctioned Russian crude<\/p>\n\n\n\n<p class=\"has-text-align-left\">It&#8217;s also more than $34 per barrel cheaper than WTI, which is the widest gap between the two blends since 2018<\/p>\n\n\n\n<p class=\"has-text-align-left\">Western Canada Select almost always sells at a discount to WTI, because only a comparatively small number of refineries are capable of handling it. It&#8217;s generally seen to be\u00a0of lower quality because of its high sulphur content, which makes it a\u00a0<q>sour<\/q>\u00a0blend, versus a\u00a0<q>sweeter<\/q>\u00a0blend like WTI. That\u00a0means refineries have to be calibrated in a certain way just to process it, which pushes down the price of WCS to offset that added cost<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" data-src=\"https:\/\/images.radio-canada.ca\/q_auto,w_700\/v1\/ici-info\/16x9\/price-gap-canadina-oil-international-market.png\" alt=\"Oilsands crude (in red) is always cheaper than the North American benchmark WTI (in blue) but the price gap (in yellow) is at its widest point in more than 4 years right now.\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" class=\"lazyload\" \/><figcaption>Oilsands crude (in red) is always cheaper than the North American benchmark WTI (in blue) but the price gap (in yellow) is at its widest point in more than 4 years right now.PHOTO:&nbsp;(BLOOMBERG\/CBC)<\/figcaption><\/figure>\n\n\n\n<p class=\"has-text-align-left\">Then there&#8217;s the cost of shipping it from Northern Alberta to refineries in the United States, which even under ideal circumstances add another\u00a0$5 to $10 discount on the price of every barrel.\u00a0Oil is priced in U.S.\u00a0dollars because like many commodities including gold, the market is international<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Pipelines aren&#8217;t to blame this time<\/h2>\n\n\n\n<p class=\"has-text-align-left\">Drum-tight pipeline capacity is normally to blame any time the spread between the two oil blends is as wide as it is right now, but experts say that isn&#8217;t the case this time around<\/p>\n\n\n\n<p class=\"has-text-align-left\">Instead, there are fewer buyers for WCS because multiple refineries that process it are offline at the moment. And there&#8217;s reduced demand for oil overall because of fears a recession is coming\u00a0<\/p>\n\n\n\n<p class=\"has-text-align-left\">Add it all up and it&#8217;s a perfect storm of reasons why the bottom has fallen out of Canada&#8217;s oil price, said\u00a0Vijay\u00a0Muralidharan, director, R Cube Economic Consulting Inc.\u00a0<q>Demand is falling and when demand falls the differential widens,<\/q>\u00a0he told CBC News in an interview<\/p>\n\n\n\n<p class=\"has-text-align-left\">Fall is typically the season when refineries shut themselves down to perform maintenance, but there&#8217;s even more refineries than normal offline right now, due to unplanned shutdowns. A 160,000-barrel-per-day\u00a0refinery in Toledo, Ohio, was shut down due to a fire in August, and while it reopened last month, it&#8217;s not yet back to full capacity<\/p>\n\n\n\n<p class=\"has-text-align-left\">An even bigger one in\u00a0Whiting, Ind., near Chicago,\u00a0normally processes 430,000 barrels of oil per day, but it, too, was knocked offline by a fire, and it has also yet to get back to normal\u00a0<\/p>\n\n\n\n<p class=\"has-text-align-left\"><q>A lot of Canadian heavy crude goes to that refinery and if it goes off it&#8217;s a big hit to WCS,<\/q>\u00a0Muralidharan said. So Canadian crude that would normally be refined somewhere around Chicago is having to travel further afield to get processed<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Mississippi River barges exacerbating the problem<\/h2>\n\n\n\n<p class=\"has-text-align-left\">Some of it would normally travel by river,\u00a0but that route is also part of the problem right now because of abnormally low water levels on the\u00a0Mississippi River,\u00a0said\u00a0Rory Johnston, founder of the Commodity Context newsletter<\/p>\n\n\n\n<p class=\"has-text-align-left\"><q>They typically barge a bunch of these products out [but] the Mississippi is running very dry\u00a0so there&#8217;s concerns about bottlenecks and shipping there as well,<\/q>\u00a0he said in an interview<\/p>\n\n\n\n<p class=\"has-text-align-left\">At least a half dozen barges on the Mississippi have been grounded in the past week, the U.S. coast guard says, causing shipping delays and concerns that more could get stuck. One of the results of that bottleneck is that refineries that rely on the river to bring in crude and ship out product are temporarily losing their appetite for Canadian oil<\/p>\n\n\n\n<p class=\"has-text-align-left\"><q>The low level of the\u00a0Mississippi\u00a0does seem to be weighing on WCS prices, given the supply dislocations it is causing,<\/q>\u00a0oil analyst Matt Smith with Kpler told CBC News in an email.\u00a0<q>Refineries are seemingly having to dial back on activity because they are unable to move products<\/q><\/p>\n\n\n\n<p class=\"has-text-align-left\">That reduced demand for Canadian crude is spreading from Chicago to every part of the complex oil supply chain<\/p>\n\n\n\n<p class=\"has-text-align-left\"><q>We&#8217;re actually seeing the weakness extend all the way down to the US Gulf Coast,<\/q>\u00a0Johnston said<\/p>\n\n\n\n<p class=\"has-text-align-left\">There&#8217;s more than enough pipeline capacity to get oil wherever it needs to go at the moment. But even once those\u00a0WCS barrels get to the many refineries around the U.S. Gulf Coast, they&#8217;re then faced with their next problem:\u00a0The\u00a0Biden administration has been\u00a0<a href=\"https:\/\/www.cbc.ca\/news\/business\/biden-oil-prices-1.6403716\" target=\"_blank\" rel=\"noreferrer noopener\">releasing millions of barrels from the nation&#8217;s Strategic Petroleum Reserve\u00a0(new window)<\/a>, in order to offset the tumult caused by Putin&#8217;s invasion<\/p>\n\n\n\n<p class=\"has-text-align-left\">Those barrels of WCS are sloshing around in the same refinery hub as those American barrels, trying to find a buyer. And all that crude is starting to pile up.\u00a0<a href=\"https:\/\/www.eia.gov\/petroleum\/supply\/weekly\/pdf\/highlights.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Data from the EIA\u00a0\u00a0(new window)<\/a>on Wednesday showed the total number of barrels of oil in storage in the U.S. increased by almost 10 million barrels last week\u00a0<\/p>\n\n\n\n<p class=\"has-text-align-left\">That means demand is waning, which is a general sign the economy is slowing \u2014 which means oil prices will face an uphill climb even under ideal circumstances<\/p>\n\n\n\n<p class=\"has-text-align-left\"><q>The good news here is that this doesn&#8217;t appear to be related to insufficient pipeline capacity for Canadian oil. The bad news is that\u00a0it&#8217;s something almost entirely outside of our control right now,<\/q>\u00a0Johnston said<\/p>\n\n\n\n<p class=\"has-text-align-left\"><q>It doesn&#8217;t seem to be getting better yet. So there&#8217;s an open question how bad this will get<\/q><\/p>\n","protected":false},"excerpt":{"rendered":"<p>?Oil is going for $90 US a barrel right now. So why is Canadian oilsands crude going for under $60 A barrel of the North American oil benchmark is changing hands for about $90 US a barrel right now, but the heavy crude that comes from Canada&#8217;s oilsands is fetching $30 less because of a [&hellip;]<\/p>\n","protected":false},"author":9,"featured_media":11300,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"jnews-multi-image_gallery":[],"jnews_single_post":{"subtitle":"","format":"standard","video":"","gallery":"","source_name":"","source_url":"","via_name":"","via_url":"","override_template":"0","override":[{"template":"1","single_blog_custom":"","parallax":"1","fullscreen":"1","layout":"right-sidebar","sidebar":"default-sidebar","second_sidebar":"default-sidebar","sticky_sidebar":"1","share_position":"topbottom","share_float_style":"share-monocrhome","show_share_counter":"1","show_view_counter":"1","show_featured":"1","show_post_meta":"1","show_post_author":"1","show_post_author_image":"1","show_post_date":"1","post_date_format":"default","post_date_format_custom":"Y\/m\/d","show_post_category":"1","show_post_reading_time":"0","post_reading_time_wpm":"300","show_zoom_button":"0","zoom_button_out_step":"2","zoom_button_in_step":"3","show_post_tag":"1","show_prev_next_post":"1","show_popup_post":"1","number_popup_post":"1","show_author_box":"1","show_post_related":"0","show_inline_post_related":"0"}],"override_image_size":"0","image_override":[{"single_post_thumbnail_size":"crop-500","single_post_gallery_size":"crop-500"}],"trending_post":"0","trending_post_position":"meta","trending_post_label":"Trending","sponsored_post":"0","sponsored_post_label":"Sponsored by","sponsored_post_name":"","sponsored_post_url":"","sponsored_post_logo_enable":"0","sponsored_post_logo":"","sponsored_post_desc":"","disable_ad":"0"},"jnews_primary_category":{"id":"","hide":""},"jnews_social_meta":{"fb_title":"","fb_description":"","fb_image":"","twitter_title":"","twitter_description":"","twitter_image":""},"jnews_override_counter":{"override_view_counter":"0","view_counter_number":"0","override_share_counter":"0","share_counter_number":"0","override_like_counter":"0","like_counter_number":"0","override_dislike_counter":"0","dislike_counter_number":"0"},"jnews_post_split":{"enable_post_split":"0","post_split":[{"template":"1","tag":"h2","numbering":"asc","mode":"normal","first":"0","enable_toc":"0","toc_type":"normal"}]},"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[48,47],"tags":[],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Price gap on heavy Canadian oil tops $30 per barrel, widest spread since 2018\ufffc\ufffc &#8211; Ambassador Newspaper<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ambassadornews.org\/en\/price-gap-on-heavy-canadian-oil-tops-30-per-barrel-widest-spread-since-2018\ufffc\ufffc\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Price gap on heavy Canadian oil tops $30 per barrel, widest spread since 2018\ufffc\ufffc &#8211; Ambassador Newspaper\" \/>\n<meta property=\"og:description\" content=\"?Oil is going for $90 US a barrel right now. 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