(Bloomberg) — Canadian oil prices are poised to strengthen next year as Mexican heavy crude exports to U.S. Gulf Coast refineries dwindle, according to BMO Capital Markets.Heavy Western Canadian Select’s discount to the West Texas Intermediate benchmark could narrow to $5 to $7 a barrel next year, BMO said in a report Wednesday. Oil sands producers will benefit from less output of competing crude from Latin America as Petroleos Mexicanos expects to cut exports while Venezuelan supplies remain off limits due to U.S. sanctions.Western Canadian Select discount to WTI strengthened to less than $10 a barrel since mid-April, after more than a million barrels a day of oil sands production was shut due to the Covid-19 pandemic. The strong differential has remained near $10 even as oil sands supplies have returned to the market.U.S. Gulf Coast and Midwest refiners invested billions of dollars in recent decades to process heavy crude, of which Canada is among the world’s biggest producers. The country’s oil, produced in the oil-sands mines and wells in Northern Alberta, has only become more valuable as alternative grades from Latin America have diminished, a trend that’s poised to continue in the coming years.Pemex is forecasting a reduction of almost 70% in exports of its flagship heavy crude between 2021 and 2023, according to people familiar with the situation. The drop will happen due to declining output and the need to supply crude to a new $8 billion refinery championed by the country’s President Andres Manuel Lopez Obrador.U.S. Gulf Coast demand will create tension with Midwest refiners. “Chicago refiners have limited access to alternative sources of heavy oil and will bid heavy oil away from the Gulf Coast market to ensure they have enough supply,” the bank said. “We believe that this could translate to stronger prices for WCS or a tighter spread between WTI and WCS.”Increased local refinery demand and more pipeline export capacity will eliminate the need for Alberta’s mandatory production limits and further help Canada’s oil producers, BMO said. Limits were imposed by Alberta’s government two years ago to shore up prices but later relaxed after a shortage of pipelines created a bottleneck that stranded supplies.Three major oil export pipelines are currently under construction. Next year TC Energy Corp. plans to add 50,000 barrels a day of additional exports to its existing Keystone pipeline using so-called drag resistance agents after signing new 20-year contracts with shippers.The relatively brighter future for Canada’s oil sands producer contrasts with U.S. shale producers. Once constructed, oil sands operations keep pumping out crude at relatively low operating costs whereas oil from the shale oil producers of Texas and North Dakota are struggling to keep drilling amid depressed prices.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Following the death of George Floyd and subsequent protests, donations have poured into Black-led organizations and groups dedicated to racial equity. The Black Lives Matter Global Network Foundation, for example, received more than 1.1 million individual donations in the month after Floyd’s death. Higher Heights for America, which works to build the political power of […]
The FSCS has revealed that some compensated clients are losing their money a second time when they invest with another firm which also goes on to fail. Some compensated victims invest their compensation money with an adviser or provider firm which also goes on to fail – the so-called ‘double disaster’ scenario. This means […]
The US military uses lifting a log as a team-building exercise. Gantt Charts and Critical Path Analysis Flow Diagrams: two commonly used tools for detailed project management planning, enabling scheduling, costing and budgeting and other financials and reporting. This allows students to continue developing functional area expertise while honing their knowledge of international business, making […]