• 3 minutes China has *Already* Lost the Trade War. Meantime, the U.S. Might Sanction China’s Largest Oil Company
  • 7 minutes Saudi and UAE pressure to get US support for Oil quotas is reportedly on..
  • 11 minutes China devalues currency to lower prices to address new tariffs. But doesn't help. Here is why. . . .
  • 15 minutes What is your current outlook as a day trader for WTI
  • 3 hours Long Range Attack On Saudi Oil Field Ends War On Yemen
  • 1 hour Will Uncle Sam Step Up and Cut Production
  • 7 hours In The Bright Of New Administration Rules: Immigrants as Economic Contributors
  • 16 hours Domino Effect: Rashida Tlaib Rejects Israel's Offer For 'Humanitarian' Visit To West Bank
  • 16 hours Gretta Thunbergs zero carbon voyage carbon foot print of carbon fibre manufacture
  • 12 mins Maybe 8 to 10 "good" years left in oil industry * UAE model for Economic Deversification * Others spent oil billions on terrorism, wars, lopping off heads * Too late now
  • 17 hours Continental Resource's Hamm wants shale to cut production. . . He can't compete with peers.
  • 11 hours CLIMATE PANIC! ELEVENTY!!! "250,000 people die a year due to the climate crisis"
  • 22 hours NATGAS, LNG, Technology, benefits etc , cleaner global energy fuel
  • 1 day Significant: Boeing Delays Delivery Of Ultra-Long-Range Version Of 777X
  • 1 day Why Oil is Falling (including conspiracy theories and other fun stuff)
  • 20 hours Trump vs. Xi Trade Battle, Running Commentary from Conservative Tree House
  • 12 hours US Petroleum Demand Strongest Since 2007
Alt Text

Oil Crashes On New Trade War Escalation

Oil prices opened the week…

Alt Text

The Threat That Will Send Oil Down To $10

French bank BNP Paribas published…

Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

More Info

Premium Content

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


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
Download on the App Store Get it on Google Play