Canadian synthetic crude climbed further on Wednesday, while heavy differentials also tightened as supply disruptions stemming from Russia’s invasion of Ukraine deepened.
Light synthetic crude from the oil sands for April delivery settled at $4.75 per barrel above the West Texas Intermediate (WTI) benchmark, according to NE2 Canada Inc, extending gains from the previous day when it settled at $3.55 a barrel over WTI.
Trading sources said light crude was in short supply due to low North American inventories. Canadian inventories saw a slight draw this week, one source said.
Maintenance season in the oil sands is getting underway, which will contribute to tighter supply. Shell’s Scotford upgrader has a 65-day turnaround beginning in March, while Suncor Energy has maintenance at its U2 upgrader, Firebag, Fort Hills and Syncrude facilities in the second quarter. Canadian Natural Resources Ltd will start a turnaround at its Horizon upgrader in May.
“There’s not enough light crude and things are only going to get worse in May,” another source said.
Western Canada Select heavy blend crude for April delivery in Hardisty, Alberta settled at $11.65 per barrel below the WTI benchmark, according to NE2 Canada Inc, narrowing from the previous day.
The outright price of Canadian crude is over $100 a barrel.
Global oil prices surged relentlessly beyond $110 a barrel, extending a rally since Russia invaded Ukraine seven days ago, on expectations that the market will remain short of supply for months to come following sanctions on Moscow and a flood of divestment from Russian oil assets by major companies.