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Originally Posted by Hack&Lube
What are the reasons behind the current WCS high? Is it sustainable for a little while?
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WTI and Brent are over $60 because inventories are dropping and OPEC+ is maintaining large cuts while demand recovers.
The other aspect is more medium/long term, the market is starting to believe there is a supply shortage coming in 2-3 years. Covid killed shale's ability to grow their production beyond their peak for at least a few years. With their low rig count they will struggle to outrun the decline treadmill and many were struggling to generate returns before the virus smoked them.
Venezuela and Mexican heavy oil is what we generally compete against in the US gulf, one is a failed state and Mexico is forecasting 60%+ declines in their exports over the next few years.
Canada has managed to mostly sort out the takeaway capacity. Between pipe and rail and shut in production we can move every barrel at the moment. The differential is around $10 because you can sell a barrel of WCS in Houston for $3 less than WTI. It only costs about $7-10 to ship it down there by pipe.
Even gas producers here are having their moment in the sun. Gas has gone nuts in the States since the Texas storm and natural gas was selling for $1,250/mmbtu in Oklahoma today. Anyone with an ability to ship into the southern US is making a killing.