Canadian crude, dominated by heavy crude grades, is the feedstock of choice at many U.S. refineries. The economic incentive for refiners to process heavier crude grades has persisted over the turbulence of the past year and is expected to continue into the future.
U.S. imports of Canadian crude have steadily increased over the last decade, and bilateral energy links between Canada and the United States remain resilient. This is despite lower total U.S. imported volumes and ongoing scrutiny of new and existing pipelines. The regulatory and legal issues that have made it extremely difficult to build new oil transportation links does not only limit Canadian crude access to other customers; it also limits the displacement of Canadian crude in the U.S. market. Canadian crude has also benefited from the elimination of heavy crude imports sourced from Venezuela.
Positioned to Profit from Higher Prices
Canadian producers are well positioned to benefit from higher prices as vaccination rates continue to increase, fiscal stimulus makes its way into consumers’ pockets, and sunny weather signals the start of the driving season.