North Dakota Bakken Weakens to Largest Discount Since January

Crude from the Bakken shale formation declined to a three-month low against domestic benchmark West Texas Intermediate.

Prices dipped even after Enbridge Inc. said crude deliveries to the Clearbrook, Minnesota, hub were interrupted by a shutdown of Line 81 because of a 10-gallon spill.

“If the outage is lengthy, then oil will back up into western North Dakota and depress the price of Bakken at the railhead, rather than in Clearbrook,” Andy Lipow, president of Lipow Oil Associates LLC, said in a phone interview from Houston. Some volumes might be able to be re-routed north to connect with the Enbridge mainline in Canada, he said.

Bakken weakened 50 cents to a discount of $4 a barrel against WTI at 12:42 p.m. in New York, the largest discount since Jan. 15, according to data compiled by Bloomberg.

The Enbridge North Dakota system runs from Plentywood, Montana, to Clearbrook, and the capacity of the main section from Minot, North Dakota, to Clearbrook is 210,000 barrels a day, according to Enbridge’s website.

“What a world we live in, that 10 gallons can close a 210,000-barrel-a-day pipeline, but I guess these days they take a lot of precautions,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York. “This should not be a long-lasting event.”

About 20 percent of oil from the Williston Basin is shipped by pipelines, with an estimated 71 percent carried by rail, according to an April report from the North Dakota Pipeline Authority.

To contact the reporters on this story: Eliot Caroom in New York at ecaroom@bloomberg.net; Dan Murtaugh in Houston at dmurtaugh@bloomberg.net

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

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