Western Canada Select Falls to $40 Discount Seen in January

Canadian heavy crude fell to the widest discount since January against West Texas Intermediate with pipelines out of Alberta unable to meet demand and maintenance under way at U.S. Midwest refineries.

Pipelines owned by Enbridge Inc. (ENB) weren’t able to carry all that crude shippers sought to transport this month, according to two notices from the company. Refineries that consume Canadian crude are doing work, including Citgo Petroleum Corp.’s Lemont, Illinois plant, where a crude unit was shut by fire, and BP Plc (BP/)’s Whiting, Indiana, complex, which will ramp up after starting a new coker.

“We have big apportionments again on pipelines, on Enbridge for example,” David Bouckhout, senior commodity strategist for Toronto-Dominion Bank, said in an interview from Calgary. “That’s obviously going to keep some supplies building up back in Alberta. That’s going to weigh on pricing again.”

Western Canadian Select slid $2.50 a barrel to a $40 discount against WTI at 4:16 p.m. in New York, according to data compiled by Bloomberg. It was the widest differential since Jan. 14. Canadian Syncrude, a light oil processed from heavy crude, weakened $2 a barrel to a $15 discount to the U.S. benchmark, the lowest level since Mar. 13, 2012.

Enbridge Lines

Enbridge apportioned Line 4, which carries as much as 796,000 barrels a day of crude to Superior, Wisconsin, from Edmonton, Alberta, by 13 percent for the month of November. Two lines south from Superior also were apportioned.

West Texas crudes strengthened against WTI after a refinery that processes high-sulfur oil finished maintenance.

WTS, a medium-density crude priced in Midland, Texas, gained $1.50 a barrel to a discount of $4.25 a barrel below WTI in Cushing, Oklahoma. WTI in Midland, Texas, gained $1.25 a barrel against the crude in Cushing, to a discount of $3.25.

Phillips 66 (PSX) finished planned work at the Borger refinery in Texas, Rich Johnson, a Houston-based spokesman for the company, said yesterday by e-mail. The refinery processes primarily medium, sour crude delivered through pipelines from western Texas, the Texas Panhandle, Wyoming and Canada, according to the company’s website.

Midland is the closest hub to the Permian Basin, the largest oil field in the U.S. at more than 1.2 million barrels a day, according to the Energy Information Administration.

After hovering near parity with WTI in Cushing for most of this year, Midland prices fell in October amid refinery maintenance and pipeline constraints.

Magellan Midstream Partners LP (MMP) plans to avoid any downtime this quarter or next for its Longhorn pipeline, which did pump work in the third quarter, Chief Executive Officer Mike Mears said during a third-quarter earnings call yesterday. The line carries crude to Houston from western Texas.

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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