Oil at new high raises Canadian oil sands prospects – by Jeffrey Jones (Globe and Mail – July 4, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

CALGARY — Oil prices surged to a 14-month high on Wednesday, triggered partly by unrest in Egypt, a factor that may pull some investor interest back into a Canadian energy sector that has been pressured for months by uncertainty over obstacles to increasing oil sands crude exports.

Canadian oil companies such as Suncor Energy Inc. and Imperial Oil Ltd., which produce and refine the fuel, may surprise investors with strong second-quarter results in the coming weeks as world crude prices climb and Canadian prices follow suit.

Strong oil prices have not translated into share gains recently, though that has less to do with oil market fundamentals than the way large investors are allocating their money, said Chris Feltin, analyst at Macquarie Capital Markets Canada Ltd.

“The equities haven’t really responded,” Mr. Feltin said. “The Canadian institutional investors are largely positioned where they want to be, but the U.S. and international investors have been walking away over the past couple of years because they saw increasing risk with Canada in terms of its ability to grow, with reduced visibility for getting any pipelines built, like [Keystone] XL and Northern Gateway.”

TransCanada Corp.’s Keystone XL, which would carry 830,000 barrels a day to U.S. Gulf Coast refineries from Alberta, and Enbridge Inc.’s Northern Gateway, which would move 525,000 barrels a day to the Pacific Coast, face opposition from environmental and native groups.

The contentious projects are meant to boost returns for Canadian oil by giving producers of the commodity access to international markets where prices have been higher than those in the middle of North America.

Several factors have improved fundamentals for Canadian oil sand producers. Canadian heavy oil’s discount to U.S. benchmark West Texas Intermediate has narrowed in recent months due to oil sands production delays, rising rail shipments and the impending start-up of new processing equipment at a major U.S. Midwest refinery run by BP Plc., which will take in large volumes.

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