Investment firm launches first outright price index for Canada crude

By Nia Williams
CALGARY, Alberta, Jan 4 (Reuters) - A Canadian investment
management firm launched the first-ever real-time index
monitoring the outright price of heavy Canadian crude on Monday,
based on prices published by derivatives exchange ICE Futures
Europe.
Canada is the No. 1 supplier of crude to the United States
and home to the world's third-largest reserves, but its crude
has always been priced at a differential to the U.S. benchmark
West Texas Intermediate CLc1 SHRWCSMc2 .
Auspice Capital Advisors Ltd founder Tim Pickering said that
pricing differential deters investors from trading Western
Canada Select crude, the de facto Canadian benchmark grade, and
the new Canadian Crude Oil Index .CDNCRUDE will improve
transparency and liquidity.
The firm is hoping clearer pricing will attract more
investors to its Canadian crude oil exchange-traded fund,
launched last May.
At present, around 1.7 million barrels a day of WCS crude
are sold through the Alberta marketing hub of Hardisty, but
trading is concentrated on physical barrels rather than
derivatives contracts, Pickering said, unlike the market for WTI
in which financial trading dwarfs physical transactions.
"We believe Canadian crude does not get its fair share,"
Pickering said. "It's an esoteric, wholesale physical
marketplace and we think one of the things holding back the
price of the commodity is the lack of global market
participation."
Canadian heavy crude tends to trade at a hefty discount to
WTI due to a number of factors, including quality and the cost
of transporting barrels to market. It has plunged over the last
18 months in line with global benchmarks.
WCS last traded at an outright price of $23.28 per barrel, a
discount of $13.60 per barrel to WTI.
The new index is tracked and reported on the New York Stock
Exchange website and available to traders through outlets
including Thomson Reuters Eikon and Bloomberg terminals.