(Bloomberg) Canadian crude inventories are dwindling as oil-sands producers prepare to shut some operations for maintenance, potentially adding to U.S. supply woes
Crude stockpiles in Western Canada have fallen by more than 14 million barrels since early November, to less than 25 million at the end of January, according to Wood Mackenzie data. At about 36% of storage capacity, this marks the lowest utilization rate observed by Wood Mackenzie during this time of year, analyst Dylan White said by email.
Canada, the U.S.’s biggest foreign oil supplier, has boosted shipments south of the border after new pipeline capacity came online, but the country’s stockpiles are shrinking as top producers including Suncor Energy Inc., Canadian Natural Resources Ltd. and Exxon Mobil Corp.’s Imperial Oil plan major maintenance starting as early as next month.
Canada’s maintenance season could contribute to a global supply shortfall that has sent benchmark U.S. oil prices surging past $90 a barrel for the first time since 2014 and has prompted several Wall Street banks to predict $100 oil this year.
Suncor’s Firebag oil-sands well site will undergo maintenance from May 16 to July that will reduce production by 65,000 barrels a day in the second quarter, and by 20,000 in the third, according to the a local union and company announcements.
Imperial’s massive Kearl oil sands mine, Cold Lake well site and at least three upgraders will also undergo work as well.
Canadian heavy crude’s discount to West Texas Intermediate futures have narrowed to $14 a barrel from more than $20 in November, NE2 Group data show. Last week, light synthetic crude, produced in an oil sands upgrader, traded at its biggest premium to futures since April.