Canada crude-Spreads weaken with smaller Brent premium

* Synthetic quoted at around $12/bbl over WTI

* Western Canada Select around $16/bbl under

* Asphalt demand questioned

CALGARY, Alberta, April 7 (Reuters) – Canadian cash crude
spreads weakened on Thursday as the gap between North American
and world oil benchmarks narrowed and traders questioned summer
demand for asphalt, market sources said.

Light synthetic crude for May delivery was quoted at about
$12 a barrel above West Texas Intermediate, compared with
levels of about $13 over in recent days.

The oil, derived from Alberta’s oil sands, has been highly
influenced by movements in the WTI-Brent spread as well as
those in U.S. crudes with similar characteristics, such as
Light Louisiana Sweet (LLS-: Quote, Profile, Research).

WTI and Brent hit 2-1/2 year highs above $110 a barrel on
Thursday, although the Brent premium shrank to $12.37 a barrel
from $13.47. [ID:nL3E7F70KR]

Synthetic has sold at a premium to WTI since early January,
when Canadian Natural Resources Ltd’s (CNQ.TO: Quote, Profile, Research) Horizon oil
sands project went off line due to an explosion and fire.

The company has said it expects half the 110,000 bpd
production capacity to resume in the second quarter and the
remainder in the third.

Husky Energy Inc (HSE.TO: Quote, Profile, Research) began to ramp up production at
its 82,000 barrel a day Lloydminster heavy oil upgrader last
weekend. It had been operating at about half capacity since a
Feb. 2 fire.

Western Canada Select heavy oil for May fetched about $16 a
barrel under WTI, compared with $15.25 a week ago.

Questions remain about asphalt demand in Canada and the
United States as stimulus spending, much directed to road
construction and repair, drops off this summer, a trader said.

“Rack price for asphalt is one thing, but it’s whether you
can actually sell the additional metre of asphalt and there
doesn’t seem to be much of a demand for it,” the trader said.
(Reporting by Jeffrey Jones; editing by Peter Galloway)

Canada crude-Spreads weaken with smaller Brent premium