Caspian Energy Journal Caspian European Club
Tuesday, 20 November 2018 11:00

Wide Canadian oil differentials may persist, Fitch

Wide Canadian oil differentials may persist, Fitch

Western Canadian Select (WCS) to West Texas Intermediate (WTI) crude oil price differentials are likely to remain above historical norms at least over the intermediate term, Caspian Energy News ( reports with reference to Fitch Ratings.

Production cuts, higher exports by rail and an exit from refinery maintenance season in the Midwest should help ease the differential in the near-term. Still, pipeline infrastructure is a structural challenge that will continue to add volatility and cash flow risk for Canadian exploration and production (E&P) companies that most US peers lack. Implementation of International Maritime Organization 2020 emissions standards will also be a headwind for WCS.

WCS' differential to WTI is normally $12 per barrel (bbl) to $22/bbl but has risen to $40/bbl to $50/bbl since October. Increased oil sands production, a slower than expected ramp up in takeaway capacity, apportionment rule issues for existing pipelines, and heavy fall refinery maintenance in the Midwest, including at the 413,500 barrels per day (bpd) Whiting, IN refinery, all contributed to the price dislocation.

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Person in charge of the newsline: Olga Nagiyeva 

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