Heavy crude slumps on high inventories

08 Dec, 2017

Western Canada Select heavy blend crude for January delivery in Hardisty, Alberta, last traded at $21.50 per barrel below the West Texas Intermediate benchmark, according to Shorcan Energy brokers. On Thursday WCS settled at $19.50 per barrel below the benchmark.

Traders in Calgary said storage inventories were high after TransCanada Corp's 590,000 barrel per day Keystone pipeline was shut down for nearly two weeks in November after a leak in rural South Dakota.

The pipeline is a major conduit in Canada's export network, carrying crude from Hardisty to US markets. It restarted on Nov. 28 but is operating with a 20 percent cut in pressure on the orders on US regulators.

Friday's price equaled the discount WCS hit in late November when Keystone was shut down, which was the widest differential since August 2014, according to Reuters data.

Light synthetic crude from the oil sands for January delivery did not trade according to Shorcan, but was bid at $2.25 per barrel below WTI and offered at $1.50 a barrel under the benchmark.

Synthetic barrels, which settled at 70 cents per barrel under WTI on Thursday, have also weakened this week on increasing supply from Canadian Natural Resources Ltd's expansion of its Horizon oil sands project in northern Alberta.

Pipeline company Enbridge Inc is limiting deliveries of light crude into its storage tanks in Edmonton, Alberta, from Dec. 8-13 because of high inventories, according to a shipper notice seen by Reuters.

 

Copyright Reuters, 2017

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