Some Oil in Canada Has Already Tumbled Below $10 a Barrel
The absolute price of the oil sands benchmark for May delivery was the lowest since 2008.
(Bloomberg) -- As global oil benchmarks crash below $25 a barrel, some crude from Canada is already trading below $10 for the first time ever.
Heavy Canadian crude, which typically trades at a discount to U.S. West Texas Intermediate oil, is tumbling after the country’s oil-sands producers were forced to delay maintenance, pushing more supply into the market at the worst possible time.
Concerns about flying workers in from out of town as the coronavirus continues to spread led Syncrude Canada Ltd. to delay coker maintenance at its upgrader and Suncor Energy Inc. to push back planned work scheduled for May.
The delays mean that synthetic crude that wasn’t expected to be entering the market will continue to flow. Global benchmarks such as London’s Brent have fallen to the lowest level since 2003 while Saudi Arabia and Russia pump more in a war for market share just as the pandemic pummels fuel demand.
Heavy Western Canadian Select fell to a record low of $9.19 a barrel as of 9:12 a.m. New York time Wednesday, more than $15 below the U.S. benchmark. Other grades also dropped to record lows. Light synthetic crude, produced in an oil sands upgrader from bitumen, fell $6.26 to $16.97 a barrel and conventionally produced Edmonton mixed sweet fell to $13.49.
On Tuesday, Alberta’s Premier Jason Kenney declared a state of public emergency, prohibiting gatherings of 50 or more people. The energy ministry is working out how the directive will apply to the oil industry, said energy ministry spokesman Kavi Bal.
The Syncrude maintenance was forecast to cut majority-owner Suncor’s share of production by 45,000 barrels a day in the second quarter. Suncor’s planned work on its own upgrader in the quarter was to cut production by 70,000 barrels a day. Other planned maintenance in the spring includes:
- The Scotford upgrader will run at just over half-capacity during a 55-day turnaround starting in April.
- Canadian Natural Resources Ltd. will conduct maintenance on Athabasca Oil Sands Project mines.
- Husky Energy Inc.’s Lloydminster upgrader to be under repair, affecting 40,000 barrels a day.
- Canadian Natural plans work at its Jackfish site in late first quarter.
- Imperial Oil Ltd. plans work at Cold Lake, one of two trains at Kearl oil-sands site.
- Athabasca Oil Corp. will complete turnaround at Hangingstone site.
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