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Western Canadian Select crude oil at Hardisty, Alberta, falls to lowest since April 2006
DateTime: 2015-8-7 10:32:26    

Western Canadian Select crude oil at Hardisty, Alberta, fell $1.08 Thursday to $27.47/barrel, its lowest since Platts started assessing it April 3, 2006, Platts data showed.

The benchmark heavy Canadian crude was assessed 55 cents lower than Wednesday to be assessed at the calendar month average of NYMEX light sweet crude (WTI CMA) minus $17.45/b, where it traded last before the Platts close at 3:15 pm EDT.

WCS traded at minus $18/b earlier in the day but recovered to the assessed level, hitting its lowest differential since February 12, 2014, when it was assessed at WTI CMA minus $17.75/b, according to Platts data.

At these prices, WCS is quickly nearing its production breakeven range.

"The breakeven cost for any given grade of crude can be hard to pin down because you're typically always looking at multiple producers in a given basin, but WCS even more so because you're looking at a mixed blend of different bitumen and diluents," Bentek Energy analyst Travis Whalen said.

"Canadian producers have been able to significantly reduce production costs this year thanks to lower natural gas prices for steam production and natural gasoline prices for diluent, as well as lower labor costs, but that still puts production costs in a range between $20/b and $30/b for most existing projects," he said.

Bentek is a unit of Platts.

Heavy crude oil from the Alberta region has been under pressure lately as the Kearl project, brought online during the second quarter, added 30,000 b/d of oil sands production in northern Alberta.

"Imperial Oil is swimming in Kearl right now so a discount to keep phase 2 production on stream is not beyond question," one Canadian crude oil source said.

WCS at the NYMEX delivery hub at Cushing, Oklahoma, was assessed 65 cents lower at WTI CMA minus $9.75/b, where it traded, and comes to $35.52/b, its lowest outright value since Platts began its assessment in June 2012.

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