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North Dakota Bakken Weakens to Largest Discount Since January

May 3 (Bloomberg) -- 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 2:02 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.”

Pipeline Shipments

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.

Oils produced in the Gulf Coast weakened against WTI. Poseidon’s premium fell 95 cents to a $6.55-a-barrel premium over WTI and Southern Green Canyon also weakened 95 cents a barrel to a $5.55 premium. Mars Blend fell 70 cents to $6.70 a barrel over WTI.

Light Louisiana Sweet was unchanged at a $11.30 a barrel premium over WTI. Heavy Louisiana Sweet fell by 5 cents to $11.70 a barrel over WTI.

Eugene Island crude and Bonito Sour weakened 15 cents each to $9.30 over WTI. Thunder Horse slipped 50 cents to a premium of $9.50.

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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