The outright price of Canada’s benchmark heavy crude grade hit a record high on Tuesday, pulled up by a surge in West Texas Intermediate (WTI) crude as the United States banned Russian oil imports in retaliation for Russia’s invasion of Ukraine.
Western Canada Select heavy blend crude for April delivery in Hardisty, Alberta, was worth more than $110 a barrel on Tuesday, surpassing a previous high of $107 a barrel set in 2008.
The differential on WCS narrowed slightly to $12.70 per barrel below WTI, according to NE2 Canada Inc, having settled on Monday at $12.90 a barrel below the U.S. benchmark.
Light synthetic crude from the oil sands for April delivery also rallied hard, jumping $1.25 a barrel on the previous day to settle at $6.50 a barrel over WTI.
“There’s no light crude anywhere,” said one industry source, pointing to low inventories in the U.S. crude storage hub Cushing.
Canadian light crude is following Midwest prices higher, the source added.
Maintenance season is about to kick off in Canada’s oil sands, which will add to tight supply, especially for synthetic crude produced by oil sands upgraders.
A 65-day turnaround at Shell’s Scotford upgrader starts in March. Canadian Natural Resources Ltd’s Horizon upgrader and Suncor Energy’s U2 upgrader start turnarounds in May.
Suncor Chief Executive Officer Mark Little, speaking at the CERAWeek energy conference, said he expects Canadian oil production to increase this year as oil prices soar, even though most Canadian output is long-cycle production.