• 4 minutes Mueller Report Brings Into Focus Obama's Attempted Coup Against Trump
  • 7 minutes Countries with the most oil and where they're selling it
  • 10 minutes Stack gas analyzers
  • 13 minutes What Would Happen If the World Ran Out of Crude Oil?
  • 9 hours US Military Spends at least $81 Billion Protecting OPEC Persian Gulf Oil Shipping Lanes (16% DoD Budget)
  • 1 hour "Undeniable" Shale Slowdown?
  • 4 hours Climate Change Protests
  • 4 hours China To Promote Using Wind Energy To Power Heating
  • 19 hours Oil at $40
  • 10 hours U.S. Refiners Planning Major Plant Overhauls In Second Quarter
  • 3 hours How many drilling sites are left in the Permian?
  • 10 hours Gas Flaring
  • 9 hours Mueller Report Brings Into Focus Trump's Attempts to Interfere in the Special Counsel Investigation
  • 14 hours Japan’s Deflation Mindset Could Be Contagious
  • 2 days Trudeau Faces a New Foe as Conservatives Retake Power in Alberta
  • 18 hours Negative Gas Prices in the Permian
  • 1 day Ecoside

Breaking News:

Guaido Takes Strides To Topple Maduro

Alt Text

Bullish Hedge Funds Send Oil Soaring

Strong institutional interest in oil…

Alt Text

Oil Prices Snap Winning Streak

The oil price rally paused…

Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing for news outlets such as iNVEZZ and…

More Info

Trending Discussions

OPEC Cuts: A Curse For U.S. Refiners, A Blessing For Canadian Oil Sands

The lowered exports of OPEC heavy crude grades to North America are tightening the price spread between WTI and Western Canadian Select (WCS), cutting into the refining margins of U.S. refiners and at the same time helping Canadian oil sands producers sell their heavy oil at a higher price, Fitch Ratings said in a release this week.

OPEC has been mostly cutting heavy grades since the start of the production curbs. After the cartel extended the cuts into March next year and after it saw that oil prices continue to be depressed due to the persisting glut, OPEC is now deliberately targeting lower supplies to the U.S. to draw down the stockpiles, which the industry and market monitor most closely for signs of where the global demand/supply is going.

OPEC’s biggest exporter and de facto leader, Saudi Arabia, has pledged to cut its total August exports to 6.6 million bpd, which would be a nearly 1-million-bpd drop in total Saudi exports compared to the export level last year.

The decreased heavy oil supply in the U.S. has caused the WTI-WCS spread to drop from historical averages in the US$15 per-barrel range to an average of US$9.80 per barrel in the second quarter this year, Fitch has estimated. The narrower spread is eating into the refining margins of many U.S. Gulf Coast refiners such as Valero Energy, Citgo, and Phillips 66, which typically benefit from a wide WTI-WCS spread, the rating agency reckons.

Related: Is Big Oil Betting On The Wrong Horse?

On the other hand, oil companies focused on Canada’s oil sands, including Cenovus Energy and MEG, benefited from the narrower spread in Q2 and their realized sales were higher because of the lower discount of the WCS compared to WTI, Fitch Ratings said.

Lower global supply of medium and heavy grades from OPEC, as well as from Latin America—where production in some countries is falling due to ageing fields while Venezuela is in shambles—is raising demand for Canadian heavy oil as it is an easy substitute.

According to Fitch, the very tight light-heavy crude price spreads are unlikely to persist over the long term, in view of new projects coming online in Canada that would increase oil sands output. However, there is one possible event that would likely tighten the spread even more—a U.S. ban on imports of Venezuelan crude oil, Fitch noted.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage

Trending Discussions


Leave a comment
  • lawrence wegeman on August 14 2017 said:
    Help me here: Shouldn't the US increase its oil (and Natgas) inventories in light of the fact it is now exporting same? Stands to reason if you are supplying yourself and also exporting, you need higher inventory levels.

Leave a comment




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