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Energy Summary for Oct. 21, 2022

2022-10-21 19:59 ET - Market Summary

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by Stockwatch Business Reporter

West Texas Intermediate crude for December delivery added 54 cents to $85.05 on the New York Merc, while Brent for December added $1.12 to $93.50 (all figures in this para U.S.). Western Canadian Select traded at a discount of $25.75 to WTI, unchanged. Natural gas for November lost 40 cents to $4.96. The TSX energy index added 4.26 points to close at 251.49.

After another rocky day, oil prices settled higher, but only Brent notched a weekly gain. (WTI was especially volatile due to the turnover to the December contract from the November one.) Inflation and supply fears continued to jockey for traders' attention. Meanwhile, gas prices dropped for the ninth week in a row, amid mild weather forecasts, high production and low exports of LNG (liquefied natural gas). This is the longest losing streak since gas prices fell for 11 weeks in a row in early 1991.

Canadian heavy oil prices are also having a grim time. The discount between Western Canadian Select (WCS) and WTI tends to be about $10 (U.S.) to $15 (U.S.), reflecting quality and transportation costs. Since the spring, however, the discount has steadily widened to more than $25 (U.S.). This is bringing back painful memories of the last major blowout in the discount to more than $45 (U.S.) in 2018. The Alberta government responded at the time by temporarily forcing producers to curtail output in order to clear a glut of oil that was pressuring prices. In other words, the problem was a lack of Canadian pipeline capacity. This time, the problem is largely south of the border, where U.S. refiners have suffered a series of unplanned outages, right as the U.S. government is releasing vast amounts of oil from emergency reserves -- all leading to less demand for Canadian crude.

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