UPDATE 1-Canadian crude-by-rail growth slows as low oil prices bite

Thu Mar 5, 2015 6:06pm EST
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(Adds quotes, outlook for crude-by-rail growth)

By Nia Williams

CALGARY, Alberta, March 5 (Reuters) - Canadian crude-by-rail exports dipped in the fourth quarter from the previous three-month period, National Energy Board data showed on Thursday, as poor netbacks deterred some shippers from loading barrels onto trains bound for U.S. markets.

Canada exported 173,342 barrels per day of crude by rail between October and December last year, down 5 percent from 182,396 bpd shipped across the border in the third quarter.

However, fourth-quarter rail exports were still 16 percent higher than the same period a year earlier.

The quarter-on-quarter slowdown underlines how weak oil prices are putting the brakes on the North American crude-by-rail boom.

Benchmark oil prices around $50 a barrel and tight Canadian crude differentials around $14 per barrel below U.S. crude means some routes have become uneconomic.

"The differentials have come in quite a bit so they just have not been covering the railing costs," said Martin King, analyst at FirstEnergy Capital.

Canada's largest producer, Suncor Energy, no longer ships crude by rail from northern Alberta to the U.S. Gulf Coast, despite strong demand for Canadian heavy crude in North America's largest refining area.   Continued...