Deep discounts fuel Canadian oil flow into storage
By Jeffrey Jones
CALGARY, Alberta (Reuters) - Oil inventories at Canada's largest storage site are on the rise as discounts for the crude plumb new depths, a company that tracks tank volumes across North America said on Wednesday.
Oil volumes at the Hardisty, Alberta, storage site have climbed 350,000 barrels on the week to 8.2 million, which puts capacity use at 48 percent, said Abudi Zein, senior vice-president at Genscape.
That is about midway between the 2011 highs and lows, but the trend is up as production volumes rise in Western Canada and volumes also grow at the Cushing, Oklahoma, storage hub, depressing prices for land-locked crude supplies in many parts of the continent, Zein said.
Last year's high was about 11 million barrels in August and the low was about 5.8 million in December, he said.
Over the past week, Western Canada Select heavy blend for March delivery has fallen past $35 a barrel under benchmark West Texas Intermediate and has lately hovered in the low $30s per barrel under WTI.
Light synthetic has fallen into the low $20s per barrel under WTI, reaching record discounts. It sold for a premium as recently as December.
"My impression is that one of the guiding factors is basically absence of disruption. There have been no accidents in an industry that has been accident-prone and that has built up supplies and they have to go somewhere," Zein said.
On Tuesday, Canadian Natural Resources Ltd (CNQ.TO: Quote) said production at its 110,000 bpd Horizon oil sands project was curtailed due to unplanned maintenance, but that led to just a brief contraction in synthetic price spreads. Continued...