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Canadian and American economies have huge impacts on petroleum demand…
Two items that reflect the state of the market are crack-spreads, (the difference between wholesale rack prices and the price of crude) and, U.S. Canadian refined product differentials (the differentials between U.S. refined product prices and Canadian rack prices), or an indicator of the import/export alternative pricing.
The “crack-spread” graphs indicate that the crack-spreads or refinery margins for ULS diesel for Halifax, Montreal, Toronto and Edmonton fell from an average of $0.2812 CAD/L on January 9 to an average of only $0.0716 CAD/L on July 4, a $0.2096/L reduction. During this period the price of crude actually increased from $41.70 US/BBL ($0.3118 CAD/L) to $66.73 US/BBL ($0.4877 CAD/L), a $0.1759/L increase. During this period the average ULS diesel rack price for the four stated locations fell from $0.5930 CAD/L to $0.5593 CAD/L. A reduction in rack prices during a period when a major increase in the price of crude has occurred indicates either a large reduction in distillate demand or a large increase in distillate inventories or a combination of both.
So what does this mean for Canadian oil companies and what are the differences broken down by regions in Canada? Find out in this week’s Energy Report. Send your email to: info@en-pro.com.
By: Roger McKnight, Senior Petroleum Advisor