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Oil prices are rising, but Canada is getting comparatively less for every barrel — here's why – CBC News

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Oil prices around the world have risen to their highest levels in years, but Canadian oilsands producers are seeing comparatively less for every barrel because of imbalances in supply and demand.

The benchmark North American oil price, a crude blend known as West Texas Intermediate or WTI, was changing hands for $119 US a barrel on Tuesday — within striking distance of the multi-year high of $120.99 US after Russian President Vladimir Putin’s invasion of Ukraine in February sent the market into turmoil.

WTI is what’s known as a “light, sweet” blend, so-named because it is less dense than “heavy” oils and has much less sulphur content than others that are considered to be “sour” ones. Those chemical qualities make it easier and cheaper to refine, store and ship, which is why WTI has become the prized benchmark for oil prices.

But countless other blends exist, including the type of oil that comes out of Alberta’s oilsands, a heavy and sour mix that’s known as Western Canada Select or WCS. Oilsands crude from Canada almost always trades at a discount to blends like WTI, because it must be diluted before being shipped, and many parts of the world won’t accept it as an import because of its high sulphur content.

It’s also generally cheaper because of the many transportation difficulties with getting it out of landlocked Alberta and into pipelines or railcars bound for refineries on the U.S. Gulf coast.

Typically that discount is about $10-$15 US a barrel, but recent events have pushed the gap to beyond $20. That’s the widest it’s been since November, and close to the $22-spread seen in the very early days of COVID-19 when the price of oil plunged.

That means that even as WTI flirts with $120 US a barrel, Canadian oilsands producers are still only getting $99 US for their product.

There are a few reasons why, but they all boil down to one basic rule of economics: supply and demand. 

Different oil blends require refineries to be calibrated differently to process them, and many refiners aren’t set up to process heavy blends like WCS. During the pandemic, production of many heavy blends slowed to a crawl, which inadvertently helped ensure buyers for WCS.

“For a long time WCS really benefited from the lessened availability of Mexican heavy crude and Venezuelan crude,” said Rory Johnston, founder of oil market data service Commodity Context. “All the other heavy crudes in the region they traditionally competed against, they weren’t there anymore, so WCS was near the only game in town.”

A cup of heavy oil extracted from Canadian oilsands is shown. Canadian oilsands crude always trades at a discount to more prized U.S. blends, but that price gap has widened in recent weeks. (Reuters)

But that’s no longer the case. Production of a heavy Mexican blend known as Mayan crude is surging, as are medium-heavy blends from offshore platforms like Mars and Poseidon.

The result is that refiners who take those heavy blends have no shortage of supply, so they can afford to be choosier on what to pay for it and who to buy it from. 

“You have more options, so you’re not taking as much as you’re used to,” is how energy analyst Fernando Valle with Bloomberg Intelligence describes the mindset of U.S. heavy crude refiners right now.

That demand slowdown is coming against the backdrop of an uptick in supply out of Alberta, too. May is typically a slower month for oil production in Canada’s oil patch because the changing weather results in what Valle calls a “melt-off.”

“It’s hard to move rigs because the ground thaws, so there’s typically a decline,” he said in an interview. It’s why many facilities shut down either voluntarily or involuntarily every spring, but early indications are that production is going to rebound strongly this summer. And all that excess Canadian oil is already starting to pile up. 

Canadian oil inventories are already at their highest level since 2019, and they’re poised to increase this month, according to Bloomberg data. Against the backdrop of that excess supply and lower demand, a widening price gap for Canadian oil makes perfect sense.

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“Inventories in Hardisty, Alberta, are more full than the inventories in Cushing,” Valle said, referring to the oil hub of Cushing, Oklahoma, the central transport hub of the U.S. energy industry, home to about 15 per cent of all the oil storage in the U.S.

“That’s ultimately what that differential is telling you.”

Biden plan will release even more barrels

That imbalance could be set to get worse before it gets better because of a plan announced earlier this year by the Biden administration to release millions of barrels of crude oil from the Strategic Petroleum Reserve to offset the tumult caused by Putin’s invasion.

Almost 40 million of barrels of crude is set to be released to the market starting July 1, the U.S. Department of Energy said last month, and the blend of crude being released is sour, which makes it similar to the type of oil the oilsands offers — and all of it will be released near the cluster of refineries on the U.S. Gulf Coast that Canadian producers also sell to.

Although it will happen slowly, at a pace of about 1 million barrels per day, the total planned release is more than 10 times what Canada’s oilsands produce on a typical day, so a market flooded with that much sour crude is likely to drive down the price of Canadian products even more.

“That Alberta stuff is still going to be shipped down there,” Johnston said. “They’re just going to have to discount it more to sell.”

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Alaska man charged with sending graphic threats to kill Supreme Court justices

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WASHINGTON (AP) — An Alaska man accused of sending graphic threats to injure and kill six Supreme Court justices and some of their family members has been indicted on federal charges, authorities said Thursday.

Panos Anastasiou, 76, is accused of sending more than 465 messages through a public court website, including graphic threats of assassination and torture coupled with racist and homophobic rhetoric.

The indictment does not specify which justices Anastasiou targeted, but Attorney General Merrick Garland said he made the graphic threats as retaliation for decisions he disagreed with.

“Our democracy depends on the ability of public officials to do their jobs without fearing for their lives or the safety of their families,” he said.

Anastasiou has been indicted on 22 counts, including nine counts of making threats against a federal judge and 13 counts of making threats in interstate commerce.

He was released from detention late Thursday by a federal magistrate in Anchorage with a a list of conditions, including that he not directly or indirectly contact any of the six Supreme Court justices he allegedly threatened or any of their family members.

During the hearing that lasted more than hour, Magistrate Kyle Reardon noted some of the messages Anastasiou allegedly sent between March 2023 and mid-July 2024, including calling for the assassination of two of the Republican-appointed Supreme Court justices so the current Democratic president could appoint their successors.

Instead of toning down his rhetoric after receiving a visit from FBI agents last year, Anastasiou increased the frequency of his messages and their vitriolic language, Reardon said.

Gray-haired and shackled at the ankles above his salmon-colored plastic slippers, Anastasiou wore a yellow prison outfit with ACC printed in black on the back, the initials for the Anchorage Correctional Facility, at the hearing. Born in Greece, he moved to Anchorage 67 years ago. Reardon allowed him to contact his elected officials on other matters like global warming, but said the messages must be reviewed by his lawyers.

Defense attorney Jane Imholte noted Anastasiou is a Vietnam veteran who is undergoing treatment for throat cancer and has no financial means other than his Social Security benefits.

She told the judge that Anastaiou, who signed his own name to the emails, worried about his pets while being detained. She said he only wanted to return home to care for his dogs, Freddie, Buddy and Cutie Pie.

He faces a maximum of 10 years in prison for each count of making threats against a federal judge and up to five years for each count of making threats in interstate commerce if convicted.

Threats targeting federal judges overall have more than doubled in recent years amid a surge of similar violent messages directed at public officials around the country, the U.S. Marshals Service previously said.

In 2022, shortly after the leak of a draft opinion overturning Roe v. Wade, a man was stopped near the home of Justice Brett Kavanaugh with weapons and zip ties.

___

Thiessen reported from Anchorage, Alaska.

The Canadian Press. All rights reserved.



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An iconic Churchill photo stolen in Canada and found in Italy is ready to return

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ROME (AP) — Canadian and Italian dignitaries on Thursday marked the successful recovery of a photo portrait of Winston Churchill known as “The Roaring Lion,” stolen in Canada and recovered in Italy after a two-year search by police.

At a ceremony at the Canadian Embassy in Rome, Italian carabinieri police handed over the portrait to the Canadian ambassador to Italy, Elissa Goldberg, who praised the cooperation between Italian and Canadian investigators that led to the recovery.

The 1941 portrait of the British leader taken by Ottawa photographer Yousuf Karsh is now ready for the last step of its journey home to the Fairmont Château Laurier, the hotel in Ottawa where it was stolen and will once again be displayed as a notable historic portrait.

Canadian police said the portrait was stolen from the hotel sometime between Christmas 2021 and Jan. 6, 2022, and replaced with a forgery. The swap was only uncovered months later, in August, when a hotel worker noticed the frame was not hung properly and looked different than the others.

Nicola Cassinelli, a lawyer in Genoa, Italy, purchased the portrait in May 2022 at an online Sotheby’s auction for 5,292 British pounds. He says he got a phone call from the auction house that October advising him not to sell or otherwise transfer the portrait due to an investigation into the Ottawa theft.

Cassinelli, who attended Thursday’s ceremony, said he thought he was buying a regular print and quickly agreed to send the iconic Churchill photograph home when he learned its true story.

“I immediately decided to return it to the Chateau Laurier, because I think that if Karsh donated it to the hotel, it means he really wanted it to stay there, for the particular significance this hotel had for him, and for his wife too,” Cassinelli told The Associated Press.

The famous image was taken by Karsh during Churchill’s wartime visit to the Canadian Parliament in December 1941. It helped launch Karsh’s career, who photographed some of the 20th century’s most famed icons, including Nelson Mandela, Albert Einstein and Queen Elizabeth.

Karsh and his wife Estrellita gifted an original signed print to the Fairmont Chateau Laurier in 1998. The couple had lived and operated a studio inside the hotel for nearly two decades.

Geneviève Dumas, general manager of the Fairmont Château Laurier, said on Thursday she felt immensely grateful.

“I would like to extend my deepest gratitude to everybody involved in solving this case, and ensuring the safe return of this priceless piece of history.”

Police arrested a 43-year-old man from Powassan, Ontario, in April and have charged him with stealing and trafficking the portrait. The man, whose name is protected by a publication ban, faces charges that include forgery, theft over $5,000 and trafficking in property obtained by crime exceeding $5,000.

The Canadian Press. All rights reserved.



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Mexican president blames the US for bloodshed in Sinaloa as cartel violence surges

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CULIACAN, Mexico (AP) — Mexican President Andrés Manuel López Obrador blamed the United States in part on Thursday for the surge in cartel violence terrorizing the northern state of Sinaloa which has left at least 30 people dead in the past week.

Two warring factions of the Sinaloa cartel have clashed in the state capital of Culiacan in what appears to be a fight for power since two of its leaders were arrested in the United States in late July. Teams of gunmen have shot at each other and the security forces.

Meanwhile, dead bodies continued to pop up around the city. On one busy street corner, cars drove by pools of the blood leading to a body in a car mechanic shop, while heavily armed police in black masks loaded up another body stretched out on a side street of the Sinaloan city.

Asked at his morning briefing if the U.S. government was “jointly responsible” for this violence in Sinaloa, the president said, “Yes, of course … for having carried out this operation.”

The recent surge in cartel warfare had been expected after Joaquín Guzmán López, a son of former Sinaloa cartel leader Joaquín “El Chapo” Guzmán, landed near El Paso, Texas on July 25 in a small plane with Ismael “El Mayo” Zambada.

Zambada was the cartel’s elder figure and reclusive leader. After his arrest, he said in a letter circulated by his lawyer that he had been abducted by the younger Guzmán and taken to the U.S. against his will.

On Thursday afternoon, another military operation covered the north of Culiacan with military and circling helicopters.

Traffic was heavy in Culiacan and most schools were open, even though parents were still not sending their children to classes. Businesses continue to close early and few people venture out after dark. While the city has slowly reopened and soldiers patrol the streets, many families continue to hide away, with parents and teachers fearing they’ll be caught in the crossfire.

“Where is the security for our children, for ourselves too, for all citizens? It’s so dangerous here, you don’t want to go outside,” one Culiacan mother told the Associated Press.

The mother, who didn’t want to share her name out of fear of the cartels, said that while some schools have recently reopened, she hasn’t allowed her daughter to go for two weeks. She said she was scared to do so after armed men stopped a taxi they were traveling in on their way home, terrifying her child.

During his morning press briefing, López Obrador had claimed American authorities “carried out that operation” to capture Zambada and that “it was totally illegal, and agents from the Department of Justice were waiting for Mr. Mayo.”

“If we are now facing instability and clashes in Sinaloa, it is because they (the American government) made that decision,” he said.

He added that there “cannot be a cooperative relationship if they take unilateral decisions” like this. Mexican prosecutors have said they were considering bringing treason charges against those involved in the plan to nab Zambada.

He was echoed by President-elect Claudia Sheinbaum, who said later in the day that “we can never accept that there is no communication or collaboration.”

It’s the latest escalation of tensions in the U.S.-Mexico relationship. Last month, the Mexican president said he was putting relations with the U.S. and Canadian embassies “on pause” after ambassadors criticized his controversial plan to overhaul Mexico’s judiciary by requiring all judges to stand for election.

Still, the Zambada capture has fueled criticisms of López Obrador, who has throughout his administration refused to confront cartels in a strategy he refers to as “hugs not bullets.” On previous occasions, he falsely stated that cartels respect Mexican citizens and largely fight amongst themselves.

While the president, who is set to leave office at the end of the month, has promised his plan would reduce cartel violence, such clashes continue to plague Mexico. Cartels employ an increasing array of tactics, including roadside bombs or IEDs, trenches, home-made armored vehicles and bomb-dropping drones.

Last week, López Obrador publicly asked Sinaloa’s warring factions to act “responsibly” and noted that he believed the cartels would listen to him.

But the bloodshed has only continued.

The Canadian Press. All rights reserved.



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