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27 tankers departed Westridge Marine Terminal in September, implying an estimated 13.6 million barrels were exported
China is buying more Canadian oil shipped from the Trans Mountain pipeline terminal in British Columbia, analysts say, as trade tensions flare between Beijing and the United States.
Twenty-seven tankers departed Westridge Marine Terminal in September, up sightly from the previous month, implying an estimated 13.6 million barrels were exported in the month — a sign the expanded Trans Mountain pipeline may be running near full tilt, RBC Capital Markets said in a new report.
China has emerged as a mainstay destination for Canadian crude, the bank said in its September tanker-tracking report. Led by China, the Asia-Pacific region bolstered its position as the dominant destination for Trans Mountain exports, with its share increasing to 64 per cent of volumes in September.
“China has widened its search for crude oil and appears to be aggressively purchasing Canadian barrels to avoid trade frictions and reduce shipping costs that might otherwise be higher by importing crude oil from the U.S,” RBN Energy analyst Martin King wrote in a separate note Monday.
And there’s no sign the trend is slowing so far in October.
Canadian oil exports to China are on pace to set a new record this month, Bloomberg News reported Monday, citing tanker-tracking data from Vortexa that noted a record five million barrels were shipped from B.C. in the first half of October — with more than 70 per cent destined for China.
The rise in Canadian crude exports to China has coincided with escalating trade tensions between Beijing and Washington.
Earlier this month, China announced retaliatory port fees on U.S.-linked ships, increasing the freight costs for oil tankers carrying shipments of crude to Chinese ports.
And there are some signs that China’s pivoting away from American oil and increasing imports from Canada could be helping to lift prices in Canada.
Western Canadian Select, the country’s definitive price marker for its heavy oil barrels, typically trades at a lower price than light, sweet crude types, such as the U.S. benchmark, West Texas Intermediate.
But King noted that Canadian barrels exported from the Westeridge Marine Terminal in September were selling at a smaller discount to West Texas Intermediate than similar grades shipped off the U.S. Gulf Coast.
“The latest improvement in relative value… appears to be tied to a strong increase in demand by Chinese buyers for Canadian heavy oil through Westridge,” King said.
RBC pointed to the trade “diversification benefits” provided by Trans Mountain and noted the concentrated shipments to China and California are continuing to support a “tighter and less volatile” spread between Canadian heavy oil prices and the U.S. benchmark.
The shrinking price discount has come despite a broader slump in global oil prices.
“It’s still a really healthy environment,” Rory Johnston, oil market researcher and founder of Commodity Context, said, but he noted the discount could widen again amid the usual fall slump in demand that accompanies seasonal refinery maintenance in the U.S.
“Now we’re heading into a weaker season generally for (Canadian heavy oil). This is when we’re going to begin to see tested how these differentials perform, given that we now have (Trans Mountain) up and running and the pipe is pretty full.”
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