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Canadian synthetic crude prices dropped on Thursday to the biggest discount to WTI futures since December 2013. An announcement from Suncor Energy about concluding repairs on the Syncrude Canada upgrader, which was shut after a power disruption in June, sent oil prices downhill. The production surge in Suncor’s new Fort Hills oil sands mine also contributed to the fall.
The Syncrude outage last month had investors worrying, but the latest report on second-quarter profits of Suncor Energy have dispelled all the concerns. Despite the Syncrude facility shutoff, Suncor managed to generate $1.87 billion in cash from operations in the last quarter, a rise of 46% from 2Q2017. The Calgary-based oil sands firm has projected 740,000 to 750,000 boed in output this year.
Unless Syncrude oil-sand operations come back online, Canadian crude supplies will stay a little off track this week. Suncor has said that the maintenance of pipeline shipments facility has been accelerated to alleviate the impact of the same. The crisis at Syncrude facility, which can produce 350,000 bbld has come at a time when Venezuela’s downfall, tensions in Libya and US sanctions on Iran are already pushing up prices.
Be it the Syncrude power outage, tightening US fuel inventories, or the looming sanctions on Iran, oil prices have enough backs to climb on. WTI crude futures CLc1 were up 0.6%, priced at $74.60 a barrel, compared with their last settlement. WTI hit its highest since 2014 at $75.27/barrel, yesterday. Brent crude futures LCOc1 were traded at $78.10 per barrel, up 0.4%, from their last close.
The power outage at the Syncrude facility in Alberta last week is coming up with new consequences with Canada losing as much as 10% of its supply in July. The Alberta facility produces up to 360,000 bpd. Traders are of the opinion that the outage will end up tightening Canadian supplies and reduce the crude flow to Oklahoma, which acts as for the delivery point U.S. crude futures contract.