Canadian crude prices already at $30 face more downward pressure

Fri Jul 24, 2015 6:19pm EDT
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By Kristen Hays

HOUSTON (Reuters) - Canadian crude prices have dropped to $30 a barrel and face further downward pressure as refineries shut for maintenance, cutting demand.

Outright WCS prices are trading at just above $30 a barrel, based on Shorcan differentials and NYMEX WTI, having touched a six-year low of just below $30 a barrel for one day in March.

The WCS discount to U.S. crude CLc1 tumbled in July after several months during which the heavy blend maintained $7-a-barrel to $10-a-barrel discounts to U.S. crude.

WCS for August delivery traded at $17.25 a barrel under the U.S. crude benchmark Thursday, in the weakest differential this year, according to Shorcan Energy Brokers. U.S. crude settled at $48.14, down 31 cents, its lowest close since March 31. [O/R]

The drop in outright prices is expected to drag on the results of Western Canadian producers ranging from Suncor Energy Inc (SU.TO: Quote) to mid-tier companies and their suppliers. The Toronto Stock Exchange's benchmark energy index hit a fresh 2015 low on Friday .SPTTEN

The low price is also expected to deter producers from pursuing major expansions and new projects in the Alberta oil sands.

The discount came as Imperial Oil's (IMO.TO: Quote) Kearl oil sands expansion in Alberta ramped up and other output returned after being held by wildfires in northern Alberta in mid-June, according to traders.

Some of the output was without a conduit to market, as Husky Energy Inc (HSE.TO: Quote) in early July shut down its 80,000 barrels per day upgrader in Saskatchewan for up to eight weeks of unplanned work.   Continued...

An oil pump jack pumps oil in a field near Calgary, Alberta, July 21, 2014. REUTERS/Todd Korol