Energy Intelligence - PBF Buys More Discounted Canadian Crude

October 27, 2022 – Energy Intelligence

PBF Buys More Discounted Canadian Crude

By Energy Intelligence Group

Perfect Storm

While there are specific issues that are impacting Canadian crude in particular, broader forces are weighing on heavy, sour grades of oil in general.

Quality plays a major role, especially amid the ongoing impacts of the International Maritime Organization (IMO)’s updated sulfur specifications for marine fuels. Refiners say this has prompted downstream players with less sophisticated facilities to buy more sweet feedstock in an effort to avoid sulfur. Geopolitics are also informing the wider spreads. Analysts with RBN Energy note that Russian medium, sour staple Urals is being sold at a steep discount to markets that typically see Canadian crude being re-exported from the US Gulf Coast.This means that Canadian barrels are both being displaced and must compete with lower-priced crude. “It’s become clearer that the dumping of Urals barrels will continue into 2023,” said RBN’s Housley Carr. He added that environmental issues could be playing a role as well.“We’ve even heard that the low levels on the Mississippi River could be a factor," said Carr. "A lot of refined products are barged down the river, and recent curtailments on barge traffic could be leading some Midwest refineries to cut back on production — and with that, their need for Western Canadian crude.”

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