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While Refining Costs Go Up, Canada’s Oil Prices Fall Behind Futures

oil refinery

The decline in Canada’s heavy crude prices is a result of high refining expenses rather than pipeline delays that have affected the industry in the past, say Toronto analysts.

The discount between Western Canadian Select and the West Texas Intermediate benchmark expanded to over $20 barrel on Friday ⎯ the largest since last November ⎯ Canadian heavy oil has recently seen a discount of more than $50 per barrel due to the lack of export pipelines.

Rory Johnston, managing director and market economist at Price Street, tweeted that the quality of Canadian crude is to blame for the decline in the price of oil.

In the tweet, he mentions that the discount is “not great but certainly not terrible.” And that is “being driven predominantly by quality-related factors (this isn’t a pipeline issue, at least not yet).”

As a result of the heavy, high-sulfur quality of Alberta’s sands oil, the lighter grades of crude oil tend to trade at a discount. Natural gas prices have risen about % on Monday, making it more expensive to refine heavy crude. OPEC+ is also increasing its crude production, which results in an increase in the supply of sour oil.

Original source material for this article taken from here

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Written by Olivia Woods

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