June 9 (Reuters) – After long being deeply discounted for years because of a lack of pipelines, Canadian heavy crude is finally trading like a “North American” grade, moving in tandem with U.S. sour crudes sold on the Gulf Coast after Enbridge Inc (ENB.TO) expanded its Line 3 pipeline late last year.
Unfortunately for Canadian producers, the Gulf is awash in sour crude thanks to Washington’s largest-ever release from the Strategic Petroleum Reserve (SPR) that will amount to 180 million barrels over a six-month period, in an attempt to tame high fuel prices after Russia’s invasion of Ukraine.
Millions of barrels of sour crude are flooding the market from storage caverns in Louisiana and Texas. Heavy grades like Mars and Poseidon at the U.S. Gulf Coast, the world’s largest heavy crude refining center, are languishing.