• 3 minutes Oil Price Could Fall To $30 If Global Deal Not Extended
  • 8 minutes Why Is America (Texas) Burning Millions of Dollars Per Day Of Natural Gas?
  • 11 minutes Is $60/Bbl WTI still considered a break even for Shale Oil
  • 15 minutes CNN:America's oil boom will break more records this year. OPEC is stuck in retreat
  • 18 mins The Pope: "Climate change ... doomsday predictions can no longer be met with irony or disdain."
  • 7 hours Hormuz and surrounding waters: Energy Threats to the World: Oil, LNG, shipping markets digest new risks after Strait of Hormuz attack
  • 11 hours As Iran Nuclear Deal Flounders, France Turns To Saudi For Oil
  • 7 hours The Magic and Wonders of US Shale Supply: Keeping energy price shock minimised: US oil supply keeping lid on prices despite global risks: IEA chief
  • 16 hours Middle East on brink: Oil tankers attacked off Oman
  • 7 hours Russia removes special military forces from Venezuela . . . . Maduro gone by September ? . . . Oil starts to flow ? Think so . .
  • 10 hours Never Knew Gasoline Prices were this important!
  • 9 hours (Un)expectedly: UK Court Sets Assange U.S. Extradition Hearing For February 2020
  • 1 day Emmissions up, renewables nowhere
  • 1 day Magic of Shale: EXPORTS!! Crude Exporters Navigate Gulf Coast Terminal Constraints
  • 4 hours We Are Better Than This
  • 1 day Only one country is contemplating destroying its own resource sector: Canada
  • 8 hours The Latest: Iranian FM Says US Cannot Expect To ‘Stay Safe’
Alt Text

Have Canadian Oil Prices Hit The Sweet Spot?

Canadian oil prices have recovered…

Alt Text

Oil Resilient Despite Trade Talk Failure

Oil prices fell and quickly…

Alt Text

Oil Set For Worst Monthly Drop Since November

Oil prices continued to slide…

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

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