CALGARY, Alberta (Reuters) - Benchmark Canadian heavy crude prices surged on Wednesday, with the discount to U.S. crude narrowing below $10 for the first time since June 2015, as production cuts in northern Alberta’s oil sands left traders scrambling to secure supply.
Light synthetic crude prices also traded near their highest premium in almost four years because of an outage at the Syncrude mining and upgrading project that has roiled crude markets on both sides of the U.S.-Canada border.
Western Canada Select heavy blend crude for May delivery SHRWCSMc2 climbed to $9.85 per barrel below the West Texas Intermediate benchmark in mid-morning trade, according to Shorcan Energy brokers, having settled at $10.15 per barrel below WTI on Tuesday.
ConocoPhillips’ (COP.N) 140,000 barrel per day Surmont oil sands plant has been forced to curb production because the outage at Syncrude means Surmont cannot get hold of the light synthetic crude it mixes into it bitumen to create a heavy blend that can flow on pipelines.
A ConocoPhillips spokeswoman did not give details on how much production had been impacted.
Meanwhile, Suncor Energy’s (SU.TO) 180,000 bpd Firebag oil sands project is undergoing planned maintenance, further limiting available heavy supply in the Alberta market.
The 350,000 bpd Syncrude mining and upgrading project cut production of light synthetic crude for all of April to zero after a fire last month damaged the facility and forced the operator to bring planned maintenance forward.
Light synthetic crude from the oil sands for May delivery last traded at $5.45 per barrel over the U.S. crude benchmark, dipping slightly from Tuesday’s settle of $5.55 per barrel over.
Last week, in illiquid trade, it settled at $6.00 a barrel over WTI, the heftiest premium since June 2013.
Syncrude is majority-owned by Suncor, while Imperial Oil (IMO.TO) provides operational, technical and business management support.
Reporting by Nia Williams; Editing by David Gregorio