Canadian crude shipments to the U.S. are poised to shrink just as the effects of OPEC-led output cuts are being felt in the Caribbean. That’s good news for Mexico and other local oil producers.

Syncrude Canada Ltd. told customers that they wouldn’t receive any supply in April from its 350,000 barrel-a-day upgrader, according to people familiar with the matter. The plant, which turns bitumen from Alberta’s oil sands into light synthetic crude, moved forward maintenance following a fire last month. Light crude and condensate jumped to the highest level in more than a year last week, and Western Canadian Select on Monday was the strongest since June 2015, when wildfires disrupted oil sands production.

The loss of some Canadian shipments comes just as U.S. refiners are returning from seasonal maintenance and shipments from the Middle East are declining. Mexico stands to benefit from the disruption, as higher heavy Canadian crude prices make its heavy Maya grade more attractive to U.S. Gulf Coast refiners.

The Organization of Petroleum Exporting Countries pumped 32.095 million barrels a day in March, down 200,000 a day from the previous month, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data. U.S. inventories have remained stubbornly high following the output cuts by OPEC and other large producers that took effect in January, even as signs elsewhere point to the market rebalancing.

Traders were said to have pulled between 10 million and 20 million barrels of oil from storage in the Caribbean according to estimates from traders who asked not to be named because their data is proprietary.

Western Canadian Select crude traded at US$4.12 a barrel less than Mexican Maya Monday, the smallest discount since wildfires shut about a million barrels of oil sands production in May. The price difference is too small to cover the US$7 it costs to ship a barrel of the heavy Canadian to the Gulf Coast by pipeline, according to Carl Evans, an analyst at Genscape Inc.

“Probably the Gulf will take as much Mexican as it can,” Evans said Monday by phone.

The jump last week in prices of synthetic crude and condensate, which are mixed with bitumen so it can flow easily through pipelines, pushed up heavy crude prices. Western Canadian Select surged 90 cents to US$10.50 a barrel below West Texas Intermediate, the U.S. benchmark, the smallest discount in almost two years, data compiled by Bloomberg show.

The Gulf Coast imports of Canadian crude have more than doubled in the past three years as new pipelines capacity opened up. Over the same period, Mexico’s shipments to the U.S. fell by about one-third.

Bloomberg News