Canadian oil producers enjoying higher crude prices as pipeline congestion eases
CALGARY — Canadian oil producers are pocketing higher profits as a rise in world oil prices meshes with an improving supply-demand balance that has reduced the price discounts they faced earlier this year.
Analysts say temporary shutdowns at Alberta oilsands projects for scheduled maintenance have eased the pipeline congestion that had been exacerbating the difference between bitumen-blend Western Canadian Select and New York-traded West Texas Intermediate crude prices.
That means the oil producers — some of whom cut back output in the first quarter because of poor prices — are seeing benefits from WTI prices that rose to three-and-a-half-year highs above US$71 per barrel this week following President Donald Trump’s decision to withdraw from the Iran nuclear deal.
Kevin Birn, vice-president of the North American crude oil markets for IHS Markit, says global oil prices are also supported by factors including less output from Venezuela and strong adherence to production limits from OPEC and Russia under a 2016 deal.
Energy analyst Randy Ollenberger of BMO Capital Markets says prices for Canadian crude have been bolstered recently by strong demand from U.S. Midwest refineries.
Both said they expect Western Canada oil price discounts to rise again this summer as oilsands production is restored, although Birn says increases in crude-by-rail shipments will moderate the trend.