Demand for heavy Canadian crude jumps on high oil prices

10 March 2011 23:18  [Source: ICIS news]

HOUSTON (ICIS)--Refiners are importing more heavy Canadian crude to run in complex refineries because of the higher costs of light sweet crude oil, market sources said on Thursday.

Heavy Canadian crude has been about $25/bbl cheaper than light sweet crude oil, according to the US Energy Information Administration (EIA). Heavy crude oil is typically at a discount because it requires further processing at the refinery.

With the jump in production of heavy crude oil in Alberta, Canada, many US refiners outfitted to run only light crude invested in making their refineries flexible so they could run heavier, cheaper grades.

Heavy Canadian crude requires a diluent to increase viscosity for pipeline transport. As a result, market sources said that sweet paraffinic naphtha prices have increased because of higher demand since it is used as diluent for transporting heavier crudes.

Sweet paraffinic naphtha was at a premium of 8-10 cents/gal over natural gasoline, compared with 6.5-7.5 cents/gal about two weeks ago.


By: Sheena Martin
+1 713 525 2653



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