Cenovus and Imperial Oil see Canadian crude weakness into 2023

Source: Imperial Oil

Canadian heavy oil’s discount to the US benchmark widened Wednesday as the heads of two oilsands producers said weak prices may linger into next year.

Western Canadian Select’s discount in Alberta to West Texas Intermediate widened 25 cents to $30 a barrel, data compiled by Bloomberg show. That approached levels seen last month when the discount reached its widest in five years. The wider-than-normal spread is caused by a multitude of factors and could persist into 2023, Cenovus Energy Inc. Chief executive officer Alex Pourbaix said Wednesday in an earnings call, echoing the sentiment expressed last week by Imperial Oil Ltd. CEO Brad Corson. 

Unlike past instances when Canadian oil’s discount expanded due to pipeline shortages, the price now is weak due to US releases of sour crude from government reserves, high natural gas prices that make the oil expensive to refine versus other grades, and refinery disruptions, Pourbaix said. 

“I would view it as a temporary issue that could persist into 2023,” he said. 

© 2022 Bloomberg L.P.

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