CALGARY — While most Canadian oil is being sold at a huge discount to U.S. benchmarks, barrels that can find their way to the prized Gulf Coast market are securing international prices — and even selling at a premium on some days.
A barrel of Western Canada Select at the oil price hub of Hardisty, Alta., traded for US$19.49 on Wednesday for December delivery. But the same barrel of heavy Canadian oil is fetching US$64.74 in Houston, near the West Texas Intermediate benchmark price of US$66.44, AltaCorp Capital analyst Nicholas Lupick said.
“We’re not even talking about a different barrel,” Lupick said, explaining that the WCS Canadian blend is trading at two different prices depending on whether it’s sold in Alberta or Texas.
Lupick analyzed daily trading data for months and found some Canadian oil companies fortunate enough to move their barrels to the U.S. Gulf Coast are able to realize prices similar to heavy oil blends from Mexico, Venezuela and elsewhere — which have been trading at or above the price of WTI.
On Oct. 9, for example, Mexico’s Maya crude was trading at US$77.17 per barrel on Oct. 9, above WTI’s $74.96. Lupick believes that a handful of Canadian oilsands producers such as MEG Energy Corp. and Cenovus Energy Inc. are capturing global prices on a portion of their production as they have publicly stated they have pipeline or railway capacity to ship their barrels to the U.S. Gulf Coast.