Originally posted by SASKFARMER
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WTI is 59.20 per barrel.
Western Canadian Select which is a lower grade is 38.43
Thats only $20 difference and Suncor, Husky and Federated are making good money off lower priced feedstock
Oil Price Differentials Explained: Why Alberta crude sells at a deep discount
https://www.oilsandsmagazine.com/market-insights/crude-oil-pricing-differentials-why-alberta-crude-sells-at-deep-discount-to-wti
"Although crude prices largely rise and fall together, there can be significant price differences between the different streams, depending on the type of crude (quality), supply and demand fundamentals (marketability) and costs to transport the crude to the final customer (logistics).
Quality is by far least important variable, particularly with respect to API gravity. Sulphur content and acidity are more important drivers of the quality discount.
About two-thirds of Canada's exports (3.5 million bbl/day) are shipped to the Midwest via Enbridge's Mainline. Having a single large buyer of Canadian crude, particularly heavy crude, reduces Alberta's ability to compete for higher prices.
Since Midwest refineries are largely at capacity, incremental heavy oil from the oil sands must find another buyer, or face deeper discounts.
The world's largest market for heavy, sour crude is the US Gulf Coast, which has very limited pipeline access from Western Canada. The region offers the best pricing for heavy crude, and also typically sets the price differentials.
Since Canada's export pipelines are at capacity, the incremental barrel of oil needs to be shipped by rail, which has a higher transportation cost and drives up pricing discounts.
The proposed Keystone XL pipeline to the Gulf Coast offers the best marketability, since the USGC is a very large market for heavy crude with a shortage of stable suppliers.
However, transportation discounts would be minimized by expanding capacity to BC's West Coast, either to Vancouver via the Trans Mountain Expansion, or to Kitimat, using Northern Gateway. Both offer the shortest distances to tidewater, minimizing pipeline tolls. Once seaborne, crude can be inexpensively shipped to Asia or California, two very large buyers of heavy, sour crude."
"However, the dynamics of the US refining sector began to change about 10 years ago. As imports of Canadian crude into the Midwest continued to increase, the region no longer needed to import volumes from the Gulf Coast, and instead began blending heavy Canadian crude with light Bakken oil, produced in North Dakota and transported east by rail. Canada now accounts for 99% of all foreign oil imports into the Midwest. More than 60% of Midwest total feedstock is now Canadian crude, leaving little room for future growth."
The Keystone XL is being held up in the US not Canada! Can't blame Trudeau for that can we?
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