January 6, 2015 – Reuters
High Noon on the Gulf Coast: Canada, Saudi Oil Set for Showdown
By: Catherine Ngai
As a test of wills between OPEC nations and U.S. shale drillers fuels a global oil market slump, a brewing battle between Canadian and Saudi Arabia heavy crudes for America's Gulf Coast refinery market threatens to drive prices even lower.
While the stand-off between the oil cartel and U.S. producers of light, sweet shale oil has captured the limelight in recent months, the clash over heavier grades - playing out in the shadowy, opaque physical market - may put even more pressure on global prices that have halved since mid-2014.
Two factors will come into play over the next few weeks: From the North, new oil pipelines will pump record volumes of Canadian crude to the southern refineries, many better equipped to process heavy crudes than lighter shale oil.
From the Middle East, top exporter Saudi Arabia is offering crude at discounted prices in an attempt to defend its remaining share of the important regional market, which has shrunk by more than half in recent months.
"So far, the Gulf Coast has suffered from an oversupply of light oil, but now there's competition for heavier crude," said Sandy Fielden at RBN Energy. With the Saudis already facing fierce competition for their light grades, the arrival of Canadian crude "could add insult to injury", he said.
Read the full story here: http://www.reuters.com/article/2015/01/06/us-markets-oil-saudi-osp-analy...
