The United States is buying Canadian oil in record quantities. In November, the U.S. imported 4.36 million barrels of Canadian crude a day, overtaking previous highs in 2019, according to figures published by the U.S. government last week.
Canada mostly exports crude that is heavy and sour (more sulphur), whereas U.S. shale-based production is light and sweet (less sulphur), explained Rory Johnston, the author of the Commodity Context newsletter. Canada’s heavy crude costs more to refine and thus trades at a discount to lighter U.S. crude. Before the shale boom of the 2010s, which helped the U.S. become the largest oil producer in the world, refineries there invested tens of billions of dollars upgrading their facilities to process Canadian oil more profitably.
“While there’s lots of light U.S.-based crude sloshing around, they still want those heavier barrels – so they keep buying Canadian barrels and export the excess U.S. barrels,” Mr. Johnston said via e-mail.
As a result, Canada now accounts for 63 per cent of U.S. crude imports, close to the highest levels on record.
The Canadian economy appears to be getting a boost from this demand. Economic output in oil and gas extraction rose 1.5 per cent in November, according to figures from Statistics Canada, although this was partly owing to the completion of maintenance work in the oil sands.
“Oil and gas and things like that – areas that you would expect to be more export-oriented – were showing growth” late last year, said Beata Caranci, chief economist at Toronto-Dominion Bank.
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Matt Lundy