• 4 minutes Is $60/Bbl WTI still considered a break even for Shale Oil
  • 7 minutes Oil Price Editorial: Beware Of Saudi Oil Tanker Sabotage Stories
  • 11 minutes Mueller Report Brings Into Focus Obama's Attempted Coup Against Trump
  • 15 minutes Wonders of Shale- Gas,bringing investments and jobs to the US
  • 6 hours IMO 2020 could create fierce competition for scarce water resources
  • 6 hours IMO2020 To scrub or not to scrub
  • 9 hours India After Elections: Economy And Hindu Are The First Modi’s Challenges
  • 3 hours Theresa May to Step Down
  • 2 hours Evil Awakens: Fascist Symbols And Rhetoric On Rise In Italian EU Vote
  • 6 hours Devastating Sanctions: Iran and Venezuela hurting
  • 227 days Epic Fail as Solar Crashes and Wind Refuses to Blow
  • 10 hours Old - New Kim: Nuclear Negotiations With U. S. Will Never Resume Unless Washington Changes Its Position
  • 8 hours Apple Boycott in China
  • 8 hours Compensation For A Trade War: Argentina’s Financial Crisis Creates An Opportunity For China
  • 5 hours Magic of Shale: EXPORTS!! Crude Exporters Navigate Gulf Coast Terminal Constraints
  • 1 hour Total nonsense in climate debate
  • 4 hours Level-Headed Analysis of the Future of U.S. Shale Oil Industry
Alt Text

No, The Oil Glut Hasn’t Disappeared

Weaker than expected oil demand…

Alt Text

Oil Stabilizes Ahead Of Weekly Inventory Data

Oil prices held steady on…

Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

More Info

Trending Discussions

China Can’t Get Enough Of The World’s Cheapest Crude

Canada’s oil industry woes have been a topic of discussion in the media for some time now, what with the persistent delays in the Trans Mountain expansion, unyielding opposition to anything that involves pipelines, and the growing crude production from the oil sands. The latest news, however, is good news. Chinese refiners are buying growing amounts of Canadian crude, taking advantage of a substantial discount in its price to the U.S. benchmark, brought about by the above combination of factors.

Earlier this month Bloomberg reported Chinese refiners were buying Canadian heavy that was trading at a discount of as much as US$50 to West Texas Intermediate. In a context of rising prices—all but Canadian crude, apparently—a $50-per-barrel discount is more than a good bargain. It’s an excellent bargain, especially for refiners who have just completed summer maintenance and plan to increase their imports on higher local fuel demand.

China purchased 1.58 million barrels of heavy Canadian crude oil for loading in September, up by nearly 50 percent compared to the 1.05 million barrels it imported from Canada in April, Bloomberg said last week, quoting data by cargo-tracking and intelligence company Kpler. These imports are seen to continue rising this month as well, amid the height of construction season ahead of winter in China.

This week, S&P Global Platts reported that Chinese companies had bought three cargoes of Canadian heavy crude, to load in Vancouver in November. More will follow: the huge discount of Western Canadian Select to WTI is not the only reason for this shift. The other reason has to do with supply. China’s two other main sources of heavy crude—Australia and Venezuela—are both going through a production decline albeit for different reasons. Related: The Dark Horse Of The Oil Price Rally

While the Venezuela situation is clear and unchanged, Australian heavy crude production has been on the decline due to natural depletion, S&P Global Platts notes. In fact, Woodside, the operator of the field that produces one of its benchmark heavy grades, Enfield, plans to stop pumping oil at the field by the end of this year.

Currently, there is also the seasonal factor of construction: Chinese refiners use a lot of the heavy crude they import for the production of asphalt, to be used in road construction, under Beijing’s large-scale infrastructure plans. But even after this seasonal high, chances are Chinese refiners, state and teapots alike, will continue to take advantage of the low price of Canadian crude.

There are no signs that the pipeline situation in Canada will change anytime soon. There are also no signs that production growth will begin to slow. Canadian producers are pretty much in the same position as their U.S. counterparts with the exception of the difference in prices. They need to pump more because they have debts to repay and businesses to keep afloat.

The Chinese entrance into Canada's heavy crude is the silver lining of Canada’s oil problems: if it weren’t for the hefty discount to WTI, the shipping costs would have remained too high to be attractive for Chinese refiners.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage

Trending Discussions


Leave a comment
  • Kevin Thames on October 18 2018 said:
    Last paragraph:

    "The Chinese entrance into China’s heavy crude is the silver lining of Canada’s oil problems"

    Should it be:

    The Chinese entrance into Canada’s heavy crude is the silver lining of Canada’s oil problems
  • John Brown on October 23 2018 said:
    It was always clear that Trudeau would fight to destroy the Canadian Energy Industry. He's doing a good job. Surely its not a surprise to anybody in Canada?

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News