Canada crude - Heavy grades continue to strengthen

Mon Apr 8, 2013 5:08pm EDT
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* May WCS last trades at $11.90/bbl under WTI

* May synthetic seen at $9.00/bbl over WTI

CALGARY, Alberta, April 8 (Reuters) - Canadian heavy oil prices continued to strengthen on Monday on improving demand for the crude in domestic and Midwest markets.

Western Canada Select heavy blend for May delivery last traded at $11.90 per barrel below West Texas Intermediate, according to Shorcan Energy Brokers, the narrowest differential for the two grades since early October. WCS settled on Friday at $12.35 per barrel below the benchmark.

Heavy oil prices usually strengthen in the second quarter as paving season boosts demand for asphalt, a key market for tar-like bitumen. However the rise has been unusually acute since WCS was selling for more than $40 per barrel under WTI in January.

Prices have also been supported by the slow start-up of Imperial Oil Ltd's 110,000 barrel per day Kearl oil sands project. Imperial is readying the first 50,000 bpd train at the oil sands mine but must first fill storage tanks and the pipeline serving the project before its bitumen reaches the market.

Light synthetic crude for May delivery last traded at $9.00 per barrel above WTI, down from a settlement price on Friday of $9.10 per barrel over the benchmark.

Prices for synthetic have been strong as the market anticipates tight supplies next month due to scheduled maintenance work.

Suncor Energy Inc is poised to start seven weeks of planned maintenance on the 100,000 barrel per day Upgrader 1 unit at its site north of Fort McMurray, Alberta. The overall oil sands operation has a capacity of about 350,000 bpd.

Canadian Natural Resources Ltd has said its 115,000 bpd Horizon oil sands plant will be down for 18 days in May for a turnaround, though that could stretch to 24 days, according to TD Securities.