TMX Opens Asia Route As Canadian Crude Discounts Narrow

Group 1: Investment Trends - U.S. investors are increasingly investing in Canada's fossil fuels sector, with U.S. funds now owning nearly 60% of the Oil & Gas sector due to low costs, favorable policy changes, and the completion of the Trans Mountain Pipeline (TMX) expansion [1] - This marks a significant shift from a decade ago when global funds were divesting from Canadian oil sands due to low global oil prices, high production costs, and environmental concerns [1] Group 2: Market Dynamics - Demand for heavy Canadian oil has surged, particularly from China, narrowing the discount on Canadian crude compared to West Texas Intermediate (WTI) to $10-$12 per barrel, down from approximately $50 per barrel seven years ago [2] - The completion of TMX has enabled Canada to export up to 890,000 barrels of crude a day to China and Asia, affecting supply to the U.S. Midwest and Gulf Coast [2] Group 3: Refinery Adaptations - Refineries in the Asian market have become accustomed to Western Canadian Select (WCS) and have made capital improvements to convert heavier oils into more valuable refined products [3] - The heavy crude from Alberta oil sands, characterized by a low API gravity of around 19 to 22 degrees, generally trades at a discount to lighter crudes due to its lower quality and higher sulfur content [4]