Canadian Crude Weakens After Exxon Shuts Southbound Pipeline

Western Canada Select weakened against domestic benchmark West Texas Intermediate after Exxon Mobil Corp. (XOM) shut a pipeline carrying crude from Illinois to refineries along the Gulf Coast.

Exxon shut the 20-inch Pegasus line from Patoka, Illinois, to Nederland, Texas, on March 29 following a leak of Canadian heavy crude in central Arkansas. The line can transport 96,000 barrels a day.

“Certainly, the main story is the pipeline spill,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York. “I think it’s unknown how long it’s going to be down for.”

Western Canada Select slipped 65 cents a barrel to trade at a $15 discount to WTI at 1:49 p.m. New York time, according to data from Calgary energy broker Net Energy.

Oil produced on the Gulf Coast strengthened as WTI weakened against Brent by $1.57 a barrel to a discount of $14.36 a barrel at 2:03 p.m. in New York. When Brent gains versus WTI, it typically strengthens the value of U.S. grades that compete with foreign oils priced against the European benchmark.

“The volumes have been pretty light,” Lebow said. “It’s Easter Monday in Europe, and maybe that’s exacerbating some of this trading we’re seeing.”

Heavy Louisiana Sweet’s premium to WTI widened $1.25 to $18 a barrel at 2:01 p.m. New York time, according to data compiled by Bloomberg. Light Louisiana Sweet gained $1.25 to a premium of $17.

Poseidon’s premium gained $1.70 to $13.20. Southern Green Canyon strengthened $1.15 to an $11.15 premium. Mars Blend’s premium to WTI rose by $1.25 to $13 a barrel.

The premium for Thunder Horse, which has a lower sulfur content than Mars, Poseidon and Southern Green Canyon, strengthened by $1.30 to $15.30.

To contact the reporter on this story: Eliot Caroom in New York at ecaroom@bloomberg.net

To contact the editor responsible for this story: Bill Banker at bbanker@bloomberg.net

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