Canada crude - Whiting coker start-up supports heavy grades

Thu Nov 14, 2013 7:14pm EST
 
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CALGARY, Alberta Nov 14 (Reuters) - Canadian heavy crude prices pulled back after hitting a two-week high on Thursday, although losses were expected to be limited after BP Plc started up a new coker at its Whiting, Indiana, refinery.

Western Canada Select heavy blend for December delivery last traded at $36.50 per barrel below the West Texas Intermediate benchmark, according to Shorcan Energy brokers.

That was down from a settlement price of $34.35 per barrel below the benchmark on Wednesday, the narrowest differential since Oct. 28, but markedly stronger than the 10-month low of $41.50 below WTI hit on Nov. 5.

The 102,000 barrel-per-day (bpd) Whiting coker, which began the lengthy start-up process earlier this week but may not reach full rates until next year, is a milestone in a $4 billion overhaul of the refinery to allow it to run mostly heavy Canadian crude.

Traders said the coker start-up had helped WCS recover sharply from last week's trough, and losses on Thursday were likely to be the result of position adjustment in the final days of the November trading window.

The biggest gains were seen in WCS for January delivery, which strengthened to trade at $29.50 per barrel below WTI.

David Bouckhout, senior commodities strategist at TD Securities, said WCS prices had also found technical support after slipping below $40 per barrel below WTI, which would equate to an outright price of around $54.

"BP is what we see as driving the market, as well as pure levels. The outright price for WCS, if it's anywhere from $50 to $60, over the last couple of years that has certainly been a pretty big floor for prices," Bouckhout said.

News that Citgo Petroleum Corp partially restarted a crude unit at its fire-damaged Lemont refinery should also help lift heavy crude prices, he added.

Light synthetic crude from the oil sands for December delivery weakened slightly to trade at $14.25 per barrel below WTI, compared with a settlement price of $13.55 below the benchmark on Wednesday.