Canadian sweet crude differentials and the Bakken Blend crude differentials hit record lows Wednesday as market sources continued to talk of strong supply and weak refinery demand.
"Definitely a bad refinery market," a trader in both markets said.
The Syncrude differential was assessed at the NYMEX front calendar month average minus $6.60/barrel, the lowest level since Platts began assessing Canadian crudes in March 2006. The lowest level the differential was assessed at prior to Wednesday was minus $5.75/b on November 5-6, 2008, according to Platts data.
The assessment Wednesday is a $2.60/b drop from Tuesday's assessment of minus $4/b.
The Mixed Sweet differential was assessed at minus $12.50/b, the lowest level since Platts began assessing Canadian crudes. The lowest level MSW was assessed at prior to this week was on November 6,2008, at minus $9.35/b.
The MSW assessment Wednesday was a $2.75/b decrease from Tuesday's assessment of minus $9.75/b.
The Bakken Blend ex-Clearbrook differential was assessed Wednesday at minus $10.50/b, the lowest level since Platts began assessing Bakken Blend crudes in May 2010. The lowest assessment of the Bakken Blend ex-Clearbrook differential prior to Wednesday was minus $9/b on September 13, 2010, according to Platts data.
The Bakken Blend ex-Clearbrook assessment Wednesday was a $4.30 decrease from Tuesday's assessed of minus $6.20/b.
The assessment of the Syncrude differential has decreased a total of $4.90/b from Monday's assessment and the Bakken Blend ex-Clearbrook differential assessment has decreased $5.45/b from Monday's assessment.
The Bakken Blend ex-Guernsey differential was assessed Wednesday at minus $10.80/b, the lowest level since Platts began assessing it. The lowest assessment for the differential before Wednesday was minus $9.55/b on September 13, 2010.
The Bakken Blend ex-Guernsey assessment Wednesday was a $4.30 drop from Tuesday's assessment of minus $6.50/b.
Market sources continued to attribute the decreases in the differentials Wednesday to a combination of strong production coupled with a decrease in refinery demand.
An unseasonal warm winter in December and January has increased Canadian crude production and Bakken crude production continues to increase, market sources have said.
In addition, refinery utilization rates in the Midwest fell by 1.3 percentage points to 93.2% in the last week, according to the US Energy information Administration (See story, 1645 GMT).
Several traders said that due to the low differentials, they plan to store their sweet barrels. But, they have not seen storage build yet, they said.
