“Syncrude prices have quickly adjusted, now trading $3.70 above WTI as of May 12,” according to Carl Evans, Canadian oil production analyst with Genscape.
Houston, Texas (PRWEB) May 20, 2015
With a global oversupply of crude and ever-changing price environment, the crude oil supply chain between the United States and Canada has reacted quickly to rebalance supply and demand by moving U.S. crude north to the Canadian East coast, adding new infrastructure to de-bottleneck oil sand storage hubs, and conducting maintenance at Canadian oil sands production facilities, according to Genscape analysis.
Since the beginning of 2015, nearly 19mn bbls have been shipped from the U.S. Gulf Coast to the Canadian East Coast, 10.5mn bbls from Corpus Christi terminals and 8.4mn bbls from Houston terminals. According to Genscape, without this transportation route, storage capacity could have reached critical levels, especially in Corpus Christi.
In addition, Genscape’s proprietary monitoring revealed that crude oil inventories in Edmonton, AB, fell by more than 600,000 bbls for the week ending May 8, 2015, reaching the lowest level since October 2014. The Edmonton terminals are currently utilizing 35 percent of storage capacity, a significant decrease from the 65 percent utilization rate observed at the beginning of April.
The falling inventories are due in part to increased pipeline outflow from Edmonton with the addition of a new Enbridge pipeline from Edmonton to Hardisty. On March 20, inventories surpassed the highest level recorded since Genscape began monitoring the storage hub in 2010. Since then, the implementation of the new pipeline has increased flows out of Edmonton, and stocks have plummeted in response.
Finally, Shell’s Scotford upgrader was scheduled to perform maintenance from April through late May. This will be a significant event, impacting production by an estimated 95 Mbpd yr/yr in April and 155 Mbpd yr/yr in May of synthetic production and affecting the Albian Sands heavy volumes which ship to market from the upgrader, according to Genscape’s Canadian Production Forecast.
This, in combination with several other planned outages has added another moving part to the rapidly changing North American crude picture, with prices bouncing back from lows and rigs dropping at breakneck pace. “Syncrude prices have quickly adjusted, now trading $3.70 above WTI as of May 12,” according to Carl Evans, Canadian oil production analyst with Genscape. “The team here expects this premium to WTI to narrow significantly later this summer as production bounces back, and all maintenance events are completed.”
A detailed analysis of the supply chain changes taking place in Canada is available in Genscape’s complimentary market study: http://info.genscape.com/2015-canadian-oil-supply-chain-changes
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