* 2 Aframaxes carrying Canadian crude to arrive in Asia in
* Wide Brent-WTI spread, big spot discounts draw demand for
* Pipeline, terminal constraints cap arbitrage volume
By Florence Tan and Jacob Gronholt-Pedersen
SINGAPORE, Dec 4 A wide spread between U.S.
crude futures and Brent has opened the arbitrage window for
Canadian crude to head east although the volume has been limited
by infrastructure constraints and a small pool of potential
buyers, traders said on Wednesday.
Canadian crude has been flowing to Asia intermittently over
the past few years as North America's booming oil output has
depressed U.S. benchmark prices.
The arbitrage flow of synthetic oil from western Canada,
however, has been curbed by limited pipeline capacity, a shallow
draft at the terminal that does not allow the loading of more
economical large-size tankers, and a small number of refiners in
Asia that can process these heavy sour grades.
Traders said the recent arbitrage opportunity was partly
possible because of Brent's wide premium to U.S. West Texas
Intermediate, or WTI CL-LCO1=R.
The Brent-WTI spread hit its widest in nine months last
week. Canadian grades are priced against the U.S. oil, while
most Asian grades are priced against Brent.
Two Aframaxes loaded crude at Kinder Morgan's Westridge
Marine Terminal near Vancouver last month and are headed to
Asia, Reuters iMap showed.
Tanker Mitera Marigo will arrive at on Dec. 14 Shui Dong in
southern Maoming City, where Sinopec's
refineries are located. The Eagle Phoenix will reach Singapore
on Dec. 21.
The charterers were not immediately known.
ExxonMobil's Cold Lake Blend and Royal Dutch Shell's
Albian Heavy are some of the Canadian crudes that load
at the Westridge Marine Terminal, traders said.
Both grades have an API gravity of 19-21 degrees and
contains 2-3.5 percent sulphur.
"There is a regular flow to China and India," a
Singapore-based trader said, adding that the discount for Cold
Lake would be wider than $20 a barrel to dated Brent delivered
In comparison, heavy South American grades such as Colombian
Castilla and Brazilian Roncador Heavy that are frequently
shipped to Asian refiners were trading at discounts of around
$15 to $16 per barrel below dated Brent, other traders said.
Despite the low prices, buyers of these heavy Canadian
grades in Asia were restricted mainly to China, India and oil
majors as the oils have a high metals content and buyers need to
have a big pool of inventory to blend down the heavy crude, a
trader with a North Asian refiner said.
Lighter sweet crudes from eastern Canada have also begun
moving to Asia, competing with West African and Asia-Pacific
grades. The volume could grow as the United States rejects
imports due to its growing shale oil boom.
India's biggest refiner Indian Oil Corp last month
bought one million barrels of Canadian White Rose crude through
a tender from trader Glencore.
(Reporting By Jacob Gronholt-Pedersen and Florence Tan; Editing
by Tom Hogue)