ATH's outlook on the unprecedented oil spreads in CANADAFrom ATH's outlook on the oil spreads in Canada, read below. This excerpt is for those who can see beyond this ugly period where ZAR is a victim of tax loss selling. This excerpt is not for the inexperienced and short-sighted retail investors who usually lose their shirt in the stock markets:
"The global crude outlook remains supported by strong demand, low inventories, ongoing geopolitical risk and a decrease in spare productive capacity. Athabasca is a beneficiary with its oil-weighted portfolio.
Despite the strong global crude outlook, Canadian producers have experienced unprecedented differential volatility across light and heavy product streams due to pipeline capacity constraints and refinery turnarounds in key consuming US regions.
The Company anticipates differentials to remain wider than historical levels through the winter. Athabasca has responded to the widening differentials by strategically slowing production by 5,000 – 8,000 bbl/d for the balance of the year (November and December) at Hangingstone and Leismer to optimize netbacks with no long term impacts to the reservoirs.
WCS differentials are expected to normalize between US$18 – 24/bbl over the mid-term supported by a resumption in refinery demand (~1.5 mmbbl/d of peak outages), mobilization of industry crude by rail (currently ~300,000 bbl/d), producer curtailments and Enbridge’s Line 3 Replacement project (370,000 bbl/d).
The US refinery complex has made significant investments over the past decade to increase processing capacity of heavy feedstock. Canadian heavy production is expected to have an increasing market share offsetting declines in Venezuela and Mexico."