December 11, 2017 / 11:17 PM / in 5 months

Heavy slumps to deepest discount since 2014

CALGARY, Alberta (Reuters) - Canadian heavy crude weakened sharply on Monday to its widest discount in 3-1/2 years as Enbridge Inc (ENB.TO) announced extra rationing of space on some of its pipelines, worsening a backlog of crude in Alberta storage hubs.

Calgary-based Enbridge said there would be mid-month apportionment in December on its Mainline network, which transports the majority of Canadian crude exports to the United States, because of unplanned outages in the western part of its heavy and light pipeline system.

The extra apportionment on Lines 2/3 and 4/67 comes on top of rationing announced last month, meaning that shippers will not be able to transport all their nominated crude volumes on those pipelines.

Pipeline apportionment drives Canadian crude prices lower because it leads to a glut of crude building up in Alberta. Storage inventories in the oil sands province are already high after a nearly two-week shutdown of TransCanada Corp’s (TRP.TO) Keystone pipeline in November because of a spill in rural South Dakota.

Western Canada Select heavy blend crude for January delivery in Hardisty, Alberta, last traded at $23 a barrel below the West Texas Intermediate benchmark, according to Shorcan Energy brokers, the deepest discount since July 2014. On Friday, January WCS settled at $21.50 a barrel below WTI.

December WCS slumped to $27 a barrel below the U.S. benchmark, down from Friday’s settle of $23.50 a barrel under.

The 590,000-bpd Keystone pipeline is running with pressure reduced by 20 percent on the orders of U.S. regulators investigating the South Dakota leak, and TransCanada has not said when that restriction is likely to be lifted.

Light synthetic crude from the oil sands also fell sharply on the pipeline congestion, which comes as supply from an 80,000-bpd expansion at Canadian Natural Resources Ltd’s (CNQ.TO) Horizon oil sands project ramps up.

Synthetic crude for January delivery traded at $2.25 per barrel below WTI, down from Friday’s settle of $1.65 per barrel below the benchmark.

Enbridge is currently limiting light crude deliveries into its storage tanks in Edmonton, Alberta, because of high inventories.

    Reporting by Nia Williams; Editing by Peter Cooney

    0 : 0
    • narrow-browser-and-phone
    • medium-browser-and-portrait-tablet
    • landscape-tablet
    • medium-wide-browser
    • wide-browser-and-larger
    • medium-browser-and-landscape-tablet
    • medium-wide-browser-and-larger
    • above-phone
    • portrait-tablet-and-above
    • above-portrait-tablet
    • landscape-tablet-and-above
    • landscape-tablet-and-medium-wide-browser
    • portrait-tablet-and-below
    • landscape-tablet-and-below