Canadian Crude Hits Record Low as Pipeline Space Runs Out
Canadian crude plunged to a record low relative to U.S. crude, hurt by reduced capacity at American refineries and a jump in production from new oil-sands megaprojects that has overwhelmed the nation’s pipeline system.
Maintenance work at U.S. refineries over the next six months will lead to stretches when those facilities are offline, giving portions of Canadian heavy crude nowhere to go, Andrew Botterill, a partner at Deloitte in Calgary, said in a report Thursday. That dynamic, along with increased output from newly finished projects like Suncor Energy Inc.’s Fort Hills mine and improved efficiency at existing operations, is already at play, he said.
“We’re already starting to see it,” Botterill said. “The volatility that we’ve seen in the last three months, I totally expect to see more of it in the next three months. I fully expect this kind of volatility in 2019 as well.”