* February WCS trades at $18.55/bbl below WTI
* February synthetic trades at $2.50/bbl above WTI
CALGARY, Alberta Jan 7 Canadian cash crude
prices held within sight of recent highs on Tuesday, supported
by concerns about cold weather affecting production and
increasing demand from some U.S. refineries.
Western Canada Select heavy blend for February delivery last
traded at $18.55 per barrel below the West Texas Intermediate
benchmark, according to Shorcan Energy brokers.
That compares with a settlement price of $18.90 per barrel
below WTI on Monday, which was the narrowest differential since
Light synthetic crude from the oil sands last traded at
$2.50 per barrel above WTI, compared with a four-month-high
settlement price on Monday of $2.80 per barrel above the
Market players in Calgary said a number of factors had
contributed to the recent rally in Canadian crude prices. Heavy
grades have risen steadily since hitting more than $40 per
barrel below WTI in early November.
Frigid temperatures around Fort McMurray, the production hub
for Canada's vast oil sands, prompted some traders to bet that
output will slow, even though temperatures around -40C are not
unusual for northern Alberta in January.
"Winter is always a problem to some extent, some years more
so than others," one crude trader said.
Persistent market chatter about production issues at
Imperial Oil's Kearl mining project also helped support
heavy crude prices, although Imperial Oil spokesman Pius
Rolheiser said production rates were in expected ranges, with
daily rates exceeding 100,000 bpd.
On the demand side, BP Plc is ramping up Canadian
crude processing at its 405,000 bpd Whiting, Indiana, refinery
after a revamp last year. The upgrade will increase the
refinery's Canadian crude-processing capacity to 350,000 bpd
from 85,000 bpd.
Meanwhile, Citgo Petroleum Corp's 174,500 bpd Lemont,
Illinois, refinery, which runs on a diet of mainly Canadian
crude, is likely to restart its repaired 75,000 bpd vacuum
distillation unit in the second half of January, according to
The unit was damaged in a fire on Oct. 23.
Concerns about supply and anticipation of higher demand from
Whiting and Lemont helped offset the impact of an explosion at
the Co-op refinery in Regina, Saskatchewan, on Dec. 24, which
has left the 130,000 bpd plant running at roughly half capacity.