Canada crude-Heavies slump as oversupply fears resume

Thu Jan 3, 2013 4:28pm EST

Related Topics

* Feb WCS quoted at $36/bbl under WTI

* Feb synthetic quoted at $1/bbl over WTI

* Supplies set to increase, pipeline space tight

CALGARY, Alberta, Jan 3 (Reuters) - Canadian heavy crude prices fell on Thursday as concern about oversupply and tight pipeline space returned to the market, industry sources said.

Western Canada Select heavy blend for February delivery last sold for $36 a barrel under benchmark West Texas Intermediate, a $2.90 wider discount than on Wednesday, according to Shorcan Energy Brokers.

Canadian heavies have been under severe pressure for several weeks as some major U.S. refineries underwent maintenance, pipeline capacity remained tight and supplies were set to increase with the start-up of Imperial Oil Ltd's 110,000 barrel per day Kearl oil sands project.

Imperial said Wednesday that it expects to produce first oil from the project in the coming weeks.

Meanwhile, many of Enbridge Inc's pipelines in the U.S. Midwest are apportioned by double-digit percentages.

"Oversupplied is all I see," a marketer said.

He noted, however, that prices for light synthetic have remained strong as the heavies have slumped.

Light synthetic for February last sold for $1 a barrel over WTI, down $1 from Wednesday's settlement, after Suncor Energy Inc reported a big jump in production.

Suncor said oil sands output in December averaged 385,000 bpd, up 23 percent from the month before.

Syncrude Canada Ltd, meanwhile, produced 292,000 bpd last month, up 3 percent from November, said Canadian Oil Sands Ltd , the joint venture's largest interest owner.

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