Heavy Canadian Crude Tumbles to 8-Month Low on Cramped Pipelines

Heavy Canadian crude oil fell to the lowest level in eight months as producers faced space limitations on pipelines transporting oil to U.S. markets.

Western Canada Select, a heavy oil blend from Alberta, tumbled to $34 below the U.S. benchmark, its widest discount since March 14.

Enbridge Inc. (ENB) yesterday apportioned space on two lines that move WCS to the U.S. Midwest, and TransCanada Corp. (TRP) said this week harsh weather in Manitoba will limit deliveries on its Keystone line this month.

Western Canada Select declined $2 to a discount of $34 a barrel against the benchmark West Texas Intermediate as of 2:21 p.m. New York time, according to data compiled by Bloomberg. The grade has fallen 31% since TransCanada said Nov. 13 that Keystone was operating at reduced rates, and has more than quadrupled its discount against WTI since September.

Enbridge apportioned Line 4 and Line 67, which run from Alberta to Clearbrook, Minnesota, by 18 percent because of unplanned pipeline closings and maintenance, Graham White, a Calgary-based Enbridge spokesman said yesterday.

The apportionment percentage amounts to 224,172 barrels a day of the combined capacity of the lines, according to Enbridge’s website.

TransCanada said two days ago it would declare force majeure for crude shipments scheduled to run on its Keystone line this month. Keystone was running at reduced rates from Nov. 10 to Nov. 13 as Manitoba’s provincial utility company reduced power to a pumping station in order to remove ice from power lines after a winter storm this week.

Keystone has a capacity of 590,000 barrels a day and returned to normal rates near 500,000 barrels a day on Nov. 13, Grady Semmens, a TransCanada spokesman based in Calgary, said in an e-mail. Keystone runs from Alberta to Cushing, Oklahoma, and refineries in Illinois.

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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