Canada crude -Synthetic discount expected to stay steep
* Nov synthetic trades at $10.50/bbl below WTI
* Surging production weighing heavily on synthetic prices
* Nov WCS trades at $29.25/bbl below WTI
CALGARY, Alberta, Oct 16 (Reuters) - Prices for light synthetic crude from the oil sands recently slid to the steepest discount in 18 months versus the U.S. crude benchmark, and is expected to stay relatively cheap due to Canada's surging production and congested pipelines.
Some Canadian crude market players said discounts could become the new norm for synthetic grades, which traditionally had traded around parity with West Texas Intermediate.
Earlier this month light synthetic crude from the oil sands for November delivery traded around $12.50 per barrel below WTI, the widest differential since the first quarter of 2012.
It was last trading at $10.50 per barrel below the benchmark, according to Shorcan Energy brokers, well below the year-to-date average of a $2.34 per barrel premium.
"Too much production, not enough pipelines," was how one crude trader summed up the bearish outlook.
Production at the Syncrude oil sands project in northern Alberta is ramping up rapidly after maintenance on a coker cut volumes over the summer. Continued...