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(Adds Suncor update)
By Nia Williams and Catherine Ngai
CALGARY, Alberta/NEW YORK April 19 (Reuters) - The Syncrude Canada oil sands project will run at reduced rates in May and June while maintenance work that was brought forward after a fire at the plant last month is completed, majority-owner Suncor Energy said on Wednesday.
Two trading sources in Calgary said Syncrude also issued an update to customers reiterating its most recent forecast that it will produce 5.3 million barrels in May and 6.6 million barrels in June.
The plant in northern Alberta has capacity to produce 350,000 barrels per day, nearly 11 million barrels per month, but cut production in April to zero after a fire in March that damaged the facility and forced Syncrude to advance planned maintenance.
Suncor said in a statement pipeline shipments would restart at approximately 50 percent of capacity in early May and production is expected to return to full rates by the end of June.
"Syncrude has developed a detailed repair schedule and return to service plan that includes the completion of a planned turnaround which Syncrude advanced in order to minimize the impact of the outage," Suncor said.
Investigations show damage from the mid-March fire was mostly isolated to a piperack adjacent to a hydrotreater, the company added. Suncor does not expect the Syncrude outage to affect its overall 2017 production guidance as output elsewhere should offset the cuts.
Traders said production rates for May and June were expected to be lower even before the fire because of the scheduled turnaround, but the outages still sent synthetic crude prices surging higher in early April.
Light synthetic crude from the oil sands for June delivery last traded at $2.00 per barrel over the West Texas Intermediate benchmark, according to Shorcan Energy brokers, weakening from Tuesday's settle of $2.35 per barrel over WTI as market players looked ahead to production ramping up.
There were no trades in synthetic barrels for May delivery, which settled at $2.50 per barrel over WTI the previous day.
Volumes were thin as the Canadian crude market is outside a 2-1/2-week-long trading window, which lasts from the first of the month until the day before pipeline nominations are due, in which the bulk of transactions take place.
Western Canada Select heavy blend crude for June delivery last traded at $10.70 per barrel below WTI, having settled at $10.80 per barrel under the benchmark on Tuesday. (Reporting by Nia Williams and Catherine Ngai; Editing by Bill Trott and Tom Brown)