U.S refinery maintenance to hit Canadian oil prices
CALGARY — A maintenance shutdown at the refinery that is the largest buyer of Canadian heavy oil in the United States is expected to extend and possibly worsen the price discounts on crude from north of the border.
Analysts at Alta Corp Capital in Calgary said the planned turnaround at the 430,000-barrels-perday BP Whiting refinery in Indiana — which buys about 250,000 bpd of heavy crude from Canada — will reduce demand over the next month and a half.
They said the shutdown adds to a heavy schedule of refinery maintenance in the U.S. Midwest, with about 829,000 bpd of capacity expected to be unavailable through October, higher than 560,000 bpd in the same period of 2017 and 300,000 bpd the year before.
The difference between benchmark oilsands blend Western Canadian Select and New Yorktraded West Texas Intermediate has widened to five-year highs of more than $30 US per barrel in the past week, closing Tuesday at $31.50 US per barrel.
That’s more than double the typical discount, and also reflects ongoing export pipeline constraints.
In a separate report, energy analysts at Haywood Securities Inc. point out that Canadian light oil is also facing higher-than-usual discounts to WTI and that situation is also expected to be aggravated due to lower demand from U.S. Midwest refineries.