Price differentials for heavy, sour Western Canadian Select on the US Gulf Coast have reached their highest levels on record as Albertan production curtailment, Venezuelan political upheaval and OPEC production cutbacks have created a tight supply of heavy sour grades in the region. WCS at Nederland, Texas, was assessed Monday at the NYMEX WTI CMA plus $3.50/b, its strongest ever differential, according to S&P Global Platts data going back to 2016. Since trading at parity with the WTI CMA on February 7, WCS at Nederland, Texas, has steadily strengthened as the market reacted to the high demand and short supply of heavy sours. Oil production in Alberta, where WCS is produced, was initially curtailed by 325,000 b/d in January after a provincial government mandate capped production at 3.56 million b/d. Since then, Alberta production levels have twice increased, to a total 100,000 b/d from the initial curtailment, in an effort to widen the differential between WCS at Hardisty and WTI. Since curtailment has taken effect, differentials for WCS at Nederland have strengthened by $4.40/b from trading at the WTI CMA minus $1.90/b on December 28. Venezuela sanctions On Thursday, the Trump administration said it was preparing new sanctions against Venezuela.… continue reading
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Source: CTRM Center