The discount on Canadian heavy crude oil has narrowed with startup drawing near for a $3.7-billion Illinois refinery upgrade that will boost demand for the grade, market sources said.
Western Canada Select heavy blend for November delivery was quoted at $9.90 US a barrel under benchmark West Texas Intermediate, compared with $10.30 and $10.60 a barrel under WTI last week.
ConocoPhillips and Cenovus Energy have said they expect the conversion project for their Wood River refinery to be complete in the fourth quarter, boosting demand for Canadian heavy oil by 130,000 barrels a day.
One trader said another likely factor behind stronger heavy prices is the return to normal output of ExxonMobil's Billings, Mont., refinery. The 60,000-bpd plant had been running under capacity since July 1, when a pipeline feeding the plant ruptured. Marketers have said a fire last week that damaged Consumers' Co-operative Refineries' 100,000bpd refinery in Regina appears to have had minimal impact on prices. The plant is producing gasoline at half its normal rate and diesel at 20 per cent of capacity, a Co-op spokesman said this week.
Meanwhile, the premium for light synthetic crude has changed little in recent days, remaining weaker than last month's spreads with three major processing units having started up or scheduled to do so in the coming weeks. November light synthetic was discussed at $8.85 to $9.20 a barrel over WTI, compared with $8.40 to $9.20 over on Friday.
Shell said Wednesday it restarted a bitumen-upgrading unit at its Scotford facility that had been off line since Sept. 28.
Syncrude Canada's coker 8-2 is expected to be back online later this month after scheduled maintenance, and Husky Energy is scheduled to ramp up output at its Lloydminster upgrader in the coming weeks.
