Canadian Oil Exports Drop, Supply Hunt on Amid Wildfires
In a sign the massive Alberta wildfire is taking a toll on oil transport, Canadian crude exports to the United States dropped 12 percent last week, while another blend of Canadian sweet crude oil rallied as concerns grow about supply.
Overall, trading in Canadian crude was quiet, as the second half of the month is generally inactive.
Hot and dry weather and strong winds were expected to push the wildfire burning near Fort McMurray, Alberta eastward on Wednesday, continuing to threaten facilities and work camps in Canada's prized oil sands.
With the fire projected to grow further, producers are starting to scramble for needed oil supply. Suncor Energy (SU) has bought a rare cargo of North Sea crude, Reuters data showed, sparking talk among traders that the Canadian company has been forced to import oil to feed its nearby refinery as the fire disrupts supplies.
Projected restarts had to be put off in recent days as the blaze, now in its third week, moved north to threaten key Syncrude and Suncor facilities.
As a result, U.S. imports of Canadian oil dropped sharply in the week ended May 13, falling to 2.6 million barrels per day, the U.S. government said. That's the lowest level since April, when a leak on TransCanada Corp's Keystone pipeline in South Dakota disrupted deliveries.
Syncrude on Wednesday said its facilities are "intact" near the wildfire, while the power plant serving Suncor's Firebag facility was restarted earlier in the day.
Canadian National Resources Ltd said the wildfire remained a safe distance from its Horizon Oil Sands project.
Separately, there was some buying in Canadian sweet crude delivered off the Pembina pipeline. The May contract, which had recently been trading at a discount to U.S. crude, rallied to trade at a 75-cent/barrel premium to WTI, according to Shorcan Energy Brokers. It traded one day earlier at a 50-cent discount/barrel to WTI.
The bulk of trading in Canadian oil takes place during the 2-1/2-week-long monthly trade cycle, which lasts from the first of each month until the day before pipeline volume nominations are due. Volumes are likely to be thin for the remainder of the month.
Shorcan showed just one trade in Western Canada Select for July delivery, at $12.10 per barrel below WTI, after settling at $11.65/bbl below WTI Tuesday.
(By David Gaffen; Additional reporting by Catherine Ngai and Nia Williams; Editing by Cynthia Osterman and Alan Crosby)
