WCS spread problemDespite Nuttall's comments that the WTI-WCS spread is a short-term non-issue and uses $ 10 in his ridiculous models, RBC released a report today saying they see it as a significant problem through at least the first half of next year. The spread has now blown out to 27-29. Of the heavy oil producers in Canada, ATH and MEG are by far the most affected with Meg's cashflow sensitivity at -18% per $ 5 move from a $ 20 base spread. ( notice they use 20 not 10)
The biggest factors creating this are:
1. China 0 covid and Russia exports to Asia
2. US refinery shortages/outages
3. SPR release
Something to watch as it's a big issue. Transmountain expansion will be a huge relief to this but that's at least the end of 2023 assuming it's not delayed yet again. On the positive, MEG is paying down debt like crazy as per sedar with a big one yesterday of 15.5m.