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Canadian Heavy Oil Weakens as Pegasus Pipeline Shuts for Work

Canadian heavy oil prices weakened as Exxon Mobil Corp. said it’s conducting planned work on the Pegasus Southern pipeline that runs from Illinois to Texas.

Concerns that low water levels on the Mississippi River may limit barge traffic later this month also contributed to the weakness in Canadian heavy oil. Barges moved 52,300 barrels of oil a day from the U.S. Midwest to the Gulf Coast in September, Energy Department data show.

Western Canada Select declined $3.60 to a $33-a-barrel discount to U.S. benchmark West Texas Intermediate as of 5:21 p.m. New York time, according to Net Energy Inc., a Calgary oil broker. Cold Lake, another Alberta heavy oil grade, declined $4.60 to $37 under WTI.

Exxon is doing maintenance on the Pegasus Southern line today, Amber Gardner, a company spokeswoman in Houston, said in an e-mail. A person with knowledge of the work said on Nov. 14 the work would last from Dec. 6 to Dec. 17.

The line can transport 96,000 barrels of oil a day, much of it from Western Canada, to refineries near Nederland, Texas.

Mississippi water levels may drop to about 9 feet by Dec. 26, according to Mark Fuchs, a hydrologist with the National Weather Service. That’s the level at which officials have said barge traffic could be restricted.

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