Opportunity Crudes

On Sept. 28, US President Donald Trump issued a presidential permit to Alaska-Alberta Railway Development Corp. (A2A Rail) for its proposed $17B, 2MM-b/d, 600-mile (2,570-km), rail line from Fort McMurray (AB) to Delta Junction at the AK coast.

Long-term regular buyers of Venezuelan crude are beginning to halt imports amid a deadline imposed by the US government, five sources close to the decisions told Reuters.

According to commodities firm Morningstar, despite the collapse in oil prices in March and economic downturn caused by the coronavirus pandemic, Canadian oilsands producers should have enough liquidity to survive in the difficult oil market.

The South American nation has resumed output from the PetroMonagas, PetroPiar, and PetroSinovensa upgraders in the Orinoco Belt this month.

Venezuela's oil production was reported to be as high as 380K b/d in recent weeks thanks to increased exports, which averaged 440K b/d in Aug.

As a result of the collapse in oil prices, oil production in Western Canada during May reportedly fell by as much as 1MM b/d (20%) from levels earlier in the year.

It is a continuation of last week's story focusing on US shale oil also called light tight oil (LTO).

Both US shale oil also called light tight oil (LTO) and Canadian oilsands bitumen are considered opportunity crudes or price-advantaged crudes because they are often traded at a discount to conventional oil due to their quality.

Venezuelan oil production has now fallen to 100-200K b/d, with further output reduction expected as US sanctions continue to hinder the ability of the country to export oil, leading domestic storage capacity to fill and forcing output to be halted until these stocks can be drawn down.

Even though oilsands output is expected to fall by around 175K b/d this year from 2019 levels due to the oil price and demand rout caused by COVID-19, IHS Markit is forecasting oilsands output to grow by about 1.1MM b/d from current levels to nearly 3.8MM b/d by 2030.