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Canada crude-Prices sink further on pipeline woes
News Articles | Reuters | January 05, 2011
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CALGARY, Alberta, Jan 5 (Reuters) – Canadian cash crude discounts deepened on Wednesday on the prospect of an extended squeeze on pipeline capacity after Enbridge Inc (ENB.TO) warned of outages in the next two months, market sources said.
February Western Canada Select heavy blend was quoted at benchmark West Texas Intermediate minus $24.50 to $30 a barrel. That compares with $21.50 to $23.25 a barrel under WTI on Tuesday.
Light synthetic for next month was assessed at $2.50 to $4 a barrel under WTI, compared with $2.25 to $3.50 a barrel under a day earlier.
Spreads started to widen on Tuesday after Enbridge said it planned five-day maintenance outages on its 290,000 barrel a day Line 6B in the U.S. Upper Midwest, one in early February and another in early March.
That is on top of already-clogged system-wide pipeline capacity following a series of repair outages and pressure reductions and high nominations for space among the company’s shippers.
That has led to full storage facilities in Western Canada, and has forced some producers to cut back shipments with few alternatives to move crude.
“There isn’t one barrel here that isn’t a buy,” one marketer said.
“Every single Canadian stream is a deal. There are no alternatives that can even compare to it. They are all smoking deals — anybody would buy it anywhere but they can’t.”
Enbridge, which moves most Canadian oil exports to the United States, has been forced to ration space on its system for several months following the rupture and shutdown of 6B last summer and another leak on the 670,000 bpd Line 6A in September.
That was the last time WCS spreads ballooned beyond $30 a barrel under WTI.
Meanwhile, Kinder Morgan’s (KMP.N) 300,000 barrel a day Trans Mountain pipeline to the West Coast from Alberta was also overbooked for January, limiting transport options. This was not due to any mechanical problems on Trans Mountain. (Reporting by Jeffrey Jones; editing by Peter Galloway)
Tagged with: pipeline, enbridge, oil prices, oil industry
