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OilMonster

Crude Oil May 10, 2019 12:30:17 AM

China Grabs More Canadian Oil as Dirty Crude Supplies Dwindle

Anil
Mathews
OilMonster Author
Bitumen from Northern Alberta’s oil sands represent the world’s third largest reserves of crude but a shortage of pipelines impede exports.
China Grabs More Canadian Oil as Dirty Crude Supplies Dwindle

OILMONSTER.COM- China is snapping up more Canadian crude as global heavy oil supplies dwindle amid Iran sanctions and a political crisis in Venezuela.

Ambelos is the second tanker to leave Vancouver’s Westridge terminal this year bound for China, according to data compiled by Bloomberg. It’s carrying more than half a million barrels of heavy Canadian crude, according to IHS Markit. It follows the Erik Spirit, which sailed to China’s Nanhai district from Westridge last month. The shipments happened even as Canadian heavy crude has sold at an average discount to West Texas Intermediate futures of less than $11 a barrel so far this year.

Worldwide supplies of heavy, high-sulfur crude are growing tighter after the Trump administration ended all waivers for countries seeking to import sanctioned Iranian crude oil and as a spiraling political crisis in Venezuela curtails that country’s oil output. In addition, supply cuts by OPEC typically target less-valuable heavy, high-sulfur barrels.

“It’s a question of adequacy of supply at this point,” Kevin Birn, IHS Markit’s director of North American crude oil markets, said by phone. “Given the rapid deterioration in Venezuela, it’s left that market a lot tighter than it would otherwise be.”

Bitumen from Northern Alberta’s oil sands represent the world’s third largest reserves of crude but a shortage of pipelines impede exports. Prices have surged since sinking to a $50 a barrel discount late last year, after the Alberta government imposed production curtailments on large producers.

Heavy Western Canadian Select in Hardisty, Alberta was $13 a barrel below WTI, and about $19 below Dubai, the Middle East benchmark. It costs about $4 a barrel via pipeline to reach the Westridge terminal for pickup by tanker, according to toll data.

Courtesy: www.hellenicshippingnews.com

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