Steep Canadian oil discount 'goes back to the pipelines': Portfolio manager
One portfolio manager is expressing his frustration as Canadian oil trades at a record discount to U.S. crude.
“It’s just infuriating losing millions of dollars every day when we don't have to,” Ryan Lewenza, senior vice president and portfolio manager at Turner Investments, Raymond James, told BNN Bloomberg Friday, placing part of the blame on ongoing delays and uncertainty over the Trans Mountain pipeline expansion project.
“Boy, do we have to get this pipeline built,” he said.
On Friday morning, Western Canadian Select was priced at less than US$21 per barrel, about US$50 per barrel below the price of North American benchmark West Texas Intermediate.
“This all goes back to the pipelines,” Lewenza said.
“We’ve got a bunch of oil, we can’t ship it. And so Canadian and international investors are basically avoiding Canada, and so that’s going to leave a cloud over the energy sector until we can get [the Trans Mountain expansion] pipeline built.”
Canadian oil prices have also been under pressure amid rising production from the country’s oil sands, and as refinery capacity in the U.S. dwindles amid planned maintenance.
The situation worsened this past week after Enbridge Inc.’s WestCoast Mainline pipeline ruptured near Prince George, B.C., forcing Washington oil refineries that are major buyers of Canadian crude to scale back operations.
“I would not be surprised to see a bounce over the next couple weeks – this is getting a little bit stretched,” Lewenza said.
With files from Bloomberg News