The shutdown of a key oil-sands facility in Canada could lead to a month-long shortage in North America and shrink stockpiles at the main US storage hub in Cushing, Oklahoma.
A transformer blast first reported by Bloomberg News last week cut power to Alberta’s giant Syncrude plant, which turns heavy crude into synthetic light oil for US markets.
As less oil flows from Canadian oil-sands, traders are paying a record premium for crude at America’s biggest distribution hub in Cushing, Oklahoma.
Goldman Sachs Group called the shutdown the most dramatic event in the oil market last week. Shares of Suncor Energy, which controls the plant, plunged the most in more than two years.
The 350,000-barrel-a-day facility, one of the biggest of its kind in the world, is going to be out of commission until the end of July, the company said.
In Canada, the outage is pummeling shares of Suncor, which owns a 59 percent stake in the operation. Having the facility down through July could cut Suncor’s third-quarter production to about 770,000 barrels a day, short of the 812,000-barrel analyst consensus.
Meanwhile, shares of Suncor rival Canadian Natural Resources are outperforming their benchmark, on the expectation that they’ll be helped by the sudden availability of additional pipeline space.
Last week’s outage is just the latest mishap at Canada’s second-oldest oil-sands mine, which started operation in the mid-1970s and has faced reliability issues in recent years. The plant last month underwent scheduled maintenance that took longer than expected.