Canada crude-Heavy crude at 10-month low on new supply

Wed Dec 12, 2012 3:33pm EST
 
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* January WCS at $36/bbl under WTI, lowest since Feb

* January synthetic weakens $1/bbl over WTI

CALGARY, Alberta Dec 12 (Reuters) - Canadian crude prices fell to the lowest level in 10 months on Wednesday on rising supply and tight pipeline capacity.

Western Canada Select heavy blend for January delivery last traded at $36 per barrel under the West Texas Intermediate benchmark, according to Shorcan Energy Brokers, the lowest since Feb. 6.

That compares with a day-before settlement price of $34.30 under the benchmark and a price of $26 per barrel under WTI a month ago.

Prices are dropping as Imperial Oil Ltd readies to open its new Kearl oil sands mine, which will produce 110,000 barrels per day of pipeline-ready bitumen. Bruce March, the company's chief executive, said this week that the project's opening had been delayed slightly by harsh winter weather in northern Alberta, but production is expected to begin next month.

The new supply comes as producers are already wrestling for pipeline space into the U.S. market. Enbridge Inc, whose lines carry the bulk of Canada's crude exports to the U.S. Midwest, has rationed space on many of its pipelines this month. And though it has yet to announce whether January capacity has been cut back, sources say space is expected to be tight as Kearl's oil enters the market.

"We are a pipeline-constrained market," a market source said. "New production never helps."

The price of light synthetic crude for January also weakened, last trading at a premium of $1 per barrel over WTI, compared with the settlement price on Monday of $1.85 over the benchmark.