GREY:ZARFF - Post by User
Post by
sculpin2on Jan 16, 2019 8:50pm
70 Views
Post# 29243128
Canadian Heavy Oil Discount Falls Into The Single Digits
Canadian Heavy Oil Discount Falls Into The Single Digits Canadian Heavy Oil Discount Falls Into The Single Digits - Crude Quality Matters
"WCS-WTI narrowed to a prompt discount of $7.50/bbl.
Alberta's mandated production cut is having its intended effect, but crude quality proxy suggests WCS-WTI discount may remain narrow going forward.
With Line 3 coming on and additional crude-by-rail capacity, a shortage of heavy oil supplies could keep the WCS-WTI discount between $9-$13/bbl, something investors have not considered.
Crude quality issue will worsen in 2019 as lower Iranian exports and falling Venezuela/Mexico production impact global flows."
"That's staggering considering that just three months earlier, Canadian heavy oil producers were getting a $50/bbldiscount on the very same oil they were selling. Much of the improvement in Canadian heavy oil prices arethanks to Alberta's mandated production cut. But differentials have now narrowed even more materially than analysts expected."
"Coming into 2019, analysts expected WCS-WTI differentials to narrow to $18 to $20. The first three months of 2019 are showing WCS diffs closer to $12 to $14/bbl. Why is WCS narrowing more than people expect?"