Wednesday , April 21 2021

Canadian crude oil price will not be left



Bloomberg reported that Canada's heavy oil prices had started rising so much since the start of Alberta's decline in production that it was already difficult for some manufacturers to sell their crude products to Gulf Coast refiners as the gap with WTI fell significantly. In fact, Bloomberg's Robert Tuttle quoted traders, Canada's oil price was $ 41 per barrel, $ 10 less than WTI.

However, the latest price chart for Canadian Western Canada's selection suggests that the spike is not available in all Canadian heavy grades. The December 11th chart says that the WCS traded at $ 26.65 a barrel, which is definitely much higher than last month at around $ 10 per barrel, but far from $ 40 per barrel.

However, the reduction in production has not yet come into force. Less than two weeks ago, Premier Rehite, Rachel Notley, said the Provincial Government will assume that 8.7 percent of crude oil production will be reduced to clean up stockpiles as pipeline bottlenecks and rising oil volumes are transported with the most expensive railroad pressure in Western Canada. Select to make historic lows against the US benchmark, WTI. They will come into force next month, reflecting a decrease of 325 000 bprd

In other words, nowadays the price increase is likely to be only a transitory response to the cuts, but the real impact on prices will emerge when Alberta producers actually start lowering prices. When that happens, it's possible that the WCS will grow to $ 40 and will stay there, putting an end to cheap Canadian crude oil.

The fact that these reductions are not the only Canadian crude oil factor. Premier Notley said that Alberta plans to build a refinery to try to process more crude oil at a local site rather than send it via expensive rail to the south to Gulf Coast refiners, reducing the risk of other price shocks, for example, which led to lower costs. Affiliated: Saudi Arabia under fire from all sides

Globe and Mail reported yesterday, quoting Premier Notley, that Alberta energy companies are interested in expanding provincial production capacity. Currently, Alberta has four refineries with a total processing capacity of 475,000 bpd. There are also two other specialized diesel fuel plants that can improve the unprocessed 110,000 bpd.

Notley said, "Let's stop the conversation and let's start, let's start producing more products that the world needs right here at home," said Notlie, adding: "The project has a sense of Albert, it must be a return on investment from the Albertans, and it has to make the difference as we use it. the energy resources that we, as Albert, have. We have to see jobs for alberts. "

A new oil refinery will really help stabilize Canadian crude oil prices, but there is one problem: the refinery can not be built in a month, even a year. In addition, some experts say that the Canadian oil province already has too much refinery capacity, and the only solution to its pricing problem is more pipelines.

One expert, a major oil analyst at En-Pro International, informed CBC that even the fourth refinery, the North Riverguer's Upgrader, which only produced diesel oil, was a mistake. Roger McKnight said: "It's hard to be polite here. It's a lot of money to get very little profit."

However, in spite of pipelines, a new oil refinery, at least a few years ago, and so many things can change, including the provincial government, are too early to make proposals about its potential impact on prices. Now cuts are still the only thing Albert can do to reduce the price of raw products so that it is suitable for the industry.

With Irina Slav on Oilprice.com

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