Canadian oil collapses at U.S. hub as refiners shun heavy crude

Canadian heavy crude’s price collapsed at the U.S. trading hub of Cushing as refiners shun heavy and higher-sulphur crude for lighter grades that are less expensive to process in refineries.

Western Canadian Select’s discount for December to West Texas Intermediate widened to $9/bbl at Cushing as of Wednesday, the steepest in about two years, according to NE2 Group data. The discount is about $7/bbl smaller than the price at the Canadian oil hub at Hardisty, Alta.  

Refiners are seeking oil that’s less dense and has less sulphur to avoid processing it through units that run on hydrogen that’s made with natural gas, the price of which has surged in recent weeks and added as much as $6/bbl to the cost of processing more sulfurous crudes, according to the International Energy Agency.

The price has also weakened at Cushing after Line 3 increased shipments of Canadian oil to the U.S. 

© 2021 Bloomberg L.P.

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