Canada Oil Spread Widest in 8 Months on Pipeline Space Limits

Canadian heavy crude fell to its lowest level in eight months against U.S. oil prices as pipeline space from Alberta was overbooked for November, making it difficult for producers to sell extra barrels.

Western Canada Select, a blend of heavy Canadian crude mostly sourced from oil sands, dropped $2 to a $33.50 a barrel below West Texas Intermediate, the widest discount to the U.S. benchmark since March 7, according to Net Energy Inc., which says it’s Canada’s largest independent financial and physical oil brokerage.

Three major pipelines taking crude from Alberta are overbooked this month, meaning producers proposed shipping more oil on the lines than there was space available.

Parts of Enbridge Inc.’s 2.5 million barrel-a-day Mainline pipeline system taking Canadian oil to the U.S. Midwest was overbooked by as much as 17 percent this month, the company said. Kinder Morgan Inc.’s 300,000 barrel-a-day Trans Mountain pipeline to Vancouver and Washington state was overbooked by 73 percent, Kinder said in an e-mail.

A third, Kinder Morgan’s 169,000 barrel-a-day Platte pipeline, was overbooked by 100 percent in its southern portion extending from Wyoming to Wood River, Illinois, where Phillips 66 operates a refinery, the company said.

Syncrude, a Canadian light synthetic oil processed from oil sands, declined $3 to a discount of $9 a barrel against WTI, according to Net Energy.

Western Canada Select’s discount to WTI widened over the course of the week, from a discount of $27 on Oct. 26, according to data compiled by Bloomberg. The discount has almost tripled since Oct. 1, when it was $11.50 a barrel below WTI.

To contact the reporter on this story: Edward Welsch in Calgary at ewelsch1@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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