Argus launches Canadian crude price assessment for trading at Cushing
Houston, 1 June 2012
Global energy price reporting agency Argus is today launching coverage of the new market for Western Canadian Select (WCS) crude that is rapidly emerging at the crude trading hub at Cushing, Oklahoma. Sharply increased Canadian crude production and movements by pipeline deeper into the US have quickly spawned a new spot market for the crude in the US midcontinent.
In an effort to bring more transparency to this emerging market, Argus will publish an assessment of the WCS price at Cushing from 1 June 2012, when the Canadian grade officially begins its July trade month. The WCS Cushing price assessment will be published in the daily Argus Crude and Argus Americas Crude reports.
Until recently, Cushing was the final stop for Canadian crudes headed south. But the reversal in mid-May of the Enbridge and Enterprise-owned Seaway pipeline to transport an initial 150,000 b/d of crude from Cushing to the US Gulf coast now means that incremental volumes of Canadian crude can be shipped further south. Heavy sour crude is a more valuable commodity in the US Gulf coast because regional refineries are configured to run heavier grades.
Of the 1.8mn b/d of crude moving from Canada to Padd II, around 1.1mn b/d is comprised of heavy sour grades such as WCS. Heavy crude transportation from Canada to Cushing increased markedly last year after TransCanada’s 155,000 b/d Keystone Phase 2 Extension pipeline began transporting Canadian crudes to Cushing in early 2011. Heavy crudes also move to Cushing on Enbridge’s 193,000 b/d Spearhead pipeline.
“The increased supply at Cushing has led to the rapid emergence of a spot market for WCS over the last two months,” Argus Media chairman and chief executive Adrian Binks said. “We are happy to be able to add transparency in these rapidly evolving North American markets.”
Trade volumes in this spot market are expected to increase as the Seaway pipeline’s capacity rises to 400,000 b/d by early 2013. Enbridge and Enterprise have further plans to potentially build a Seaway Twin pipeline that will have the capacity to move a further 450,000 b/d from Cushing to the US Gulf coast by 2014.
Argus crude prices are used globally in indexation. In the US, Argus is the primary index for domestic crude spot market, term contract and derivative market transactions. The new Argus WCS Cushing price assessment is expected to follow a similar market adoption pattern.
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