Canadian crude-by-rail exports rebound 38 percent in third quarter

Wed Nov 25, 2015 1:13pm EST
 
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By Nia Williams

CALGARY, Alberta (Reuters) - Canadian exports of crude by rail surged 38 percent in the third quarter of 2015, according to data released on Wednesday, as wider price differentials improved the economics of shipping oil on tank cars to markets and refineries in the United States.

Canada's National Energy Board said the country exported 116,000 barrels of crude per day in the three months ending Sept. 30, up from 84,000 bpd in the second quarter.

The discount on Canadian cash crude blew out to its widest level this year in August as a result of a major U.S. Midwest refinery outage and pipeline upsets that led to a glut of barrels building up in Alberta.

That pushed differentials in the Alberta trading and marketing hub in Hardisty to more than $15 a barrel below U.S. benchmark crude for several weeks, a level at which the cost of shipping crude by rail is offset by the higher price received in U.S. markets.

Rail companies also dropped freight rates for crude shippers during the quarter in a bid to lure shipments, sources told Reuters.

Rail shipments, which are more expensive than pipelines for moving crude, were down 30 percent from the third quarter of 2014, when Canada exported a record 165,998 bpd.

(Editing by Paul Simao)

 
An engine runs on the railway in downtown Lac Megantic, June 21, 2014.  REUTERS/Mathieu Belanger