Canada Crude-Grades steady as post-wildfires ramp-up speed questioned
Canadian cash crude differentials remained steady on Friday as market players questioned how fast crude volumes would come back online after wildfires slashed production in northern Alberta's oil sands region.
Western Canada Select heavy blend crude for July delivery last traded at $12.25 per barrel below benchmark West Texas Intermediate (WTI) futures, according to Shorcan Energy brokers. That was 15 cents wider than Thursday's settle of $12.10 per barrel below WTI.
Light synthetic crude from the oil sands for July delivery strengthened slightly to $3.30 per barrel above benchmark WTI, up from a premium of $3.25 on Thursday.
Analysts in Calgary said crude differentials were likely to remain strong until oil sands production levels returned to normal following a series of wildfires that forced more than 1 million barrels per day offline during part of May.
At least 400,000 barrels per day of production is shuttered, although in reality the total may be far higher still.
"It's just really a question of how fast these projects get ramped up," said Martin King, Vice President at First Energy Capital. "Given that some of these sites declared force majeure for June cargoes, I think people are not really sure how much volume is going to be affected."
King said the timeline to restart might be "a little bit longer" than what some market players were expecting, with the cumulative impacts in terms of available crude piling up.
Inventories were drawn down "quite aggressively" through May while refineries have been increasing demand at the same time, he added.
Overall global benchmark oil prices fell about 3 percent on Friday after data showed the U.S. oil drilling rig count rising for a second week in row and a stronger dollar weighed on demand for greenback-denominated crude futures.
WTI settled down $1.49 at $49.07 a barrel. Brent fell $1.41, or 2.7 percent, to $50.54.
(Reporting by Eric M. Johnson in Calgary; Editing by James Dalgleish)
