Updated March 2018
Similar to global oil prices, the price of CLS in early 2017 was strengthened by a November 2016 agreement by the Organization of the Petroleum Exporting Countries (OPEC) and several oil-producing nonmember countries to cut production by a combined 1.8 million barrels per day (106 bbl/d) over a six-month period starting in January 2017. The price of CLS increased to Cdn$64.13/bbl in the first quarter of 2017, up from Cdn$61.86/bbl in the fourth quarter of 2016. In addition, an explosion at Syncrude Canada’s (Syncrude’s) upgrader in March 2017, which took significant volumes of synthetic crude supply off line, helped to narrow the price differential between heavy and light crude oils.
Although dropping slightly in May and June, the price of CLS continued to remain elevated in the second quarter, averaging Cdn$61.82/bbl, due to supply restrictions for synthetic light crudes and to OPEC-led production cuts being extended until March 2018. In addition, the Dakota Access pipeline became operational in June, which helped ease transportation constraints.
As production at the Syncrude upgrader returned to normal levels, the price differential between CLS and WTI widened, and the price of CLS fell slightly in July to Cdn$55.16/bbl. However, the price strengthened in August as U.S. Midwest and East Coast refiners bought up light crudes after the hurricane season [Tableau] disrupted energy markets in the U.S. Gulf Coast. The price of CLS was further strengthened when Canadian Natural Resources Limited started a turnaround to bring its Horizon Phase 3 project on stream and light supplies again became constrained until tie-in activities were completed in November, with the price averaging Cdn$57.66/bbl in the third quarter of 2017.
The price of CLS continued to rise in the fourth quarter of 2017, averaging an estimated Cdn$69.48/bbl, as OPEC-led production cuts were extended until the end of 2018 and geopolitical tensions in oil-producing regions in the Middle East and Africa led to concerns about supply disruptions.
As shown in Figure 1.4 [Tableau], the price of CLS is projected to rise to Cdn$63.90/bbl in 2018, mirroring the forecast increase in the price of WTI, and is expected to continue to strengthen throughout the forecast period, averaging Cdn$93.07/bbl and ranging between Cdn$66.94/bbl and Cdn$119.20/bbl in 2027.
For information on how the CLS price is derived, see the Methodology section.