Bloomberg News

Alberta Oil Tumbles to Near Two-Week Low on Enbridge Restriction

November 15, 2012

Western Canada Select, a heavy oil blend from Alberta, tumbled to the widest discount in almost two weeks after Enbridge Inc. (ENB) allocated space on two pipelines that help take Canadian supplies to U.S. refiners.

Enbridge Inc. is apportioning Lines 4 and 67 by 18 percent in aggregate for the rest of this month, Graham White, a Calgary-based spokesman for Enbridge, said in an e-mail. The apportionment is the result of unplanned outages and maintenance, he said.

The lines, which have a combined capacity of 1.25 million barrels a day, start in Edmonton and Hardisty, Alberta, and terminate in Superior, Wisconsin. An 18 percent cut is a reduction of about 225,000 barrels a day or 14 percent of Canadian imports into the U.S. Midwest Padd 2 region.

Western Canada Select weakened $2.10 to a $32 per barrel discount to West Texas Intermediate at 3:26 p.m. in New York, according to data compiled by Bloomberg.

Syncrude declined $2.25 a barrel to a discount of $8 against the U.S. benchmark.

The grades also weakened after TransCanada Corp. (TRP) said yesterday it will declare force majeure for oil shipments on the 590,000-barrel-a-day Keystone pipeline because of power restrictions caused by severe weather.

Gulf Crudes

On the U.S. Gulf Coast, domestic grades strengthened as the margin between WTI and Brent widened to $25.53, the largest gap since October 2011. Brent for December delivery expired today.

When Brent’s premium to WTI gains, it typically strengthens the value of U.S. grades that compete with foreign oils priced using the European benchmark.

Light Louisiana Sweet’s premium to WTI widened $1.10 to $23 a barrel, the most since March 23. Heavy Louisiana Sweet added $1.35 to $22.65 a barrel over WTI.

Poseidon’s premium widened $1.60 to $19.75, the largest margin above WTI since Oct. 24, 2011. Mars Blend increased $1.65 to $19.50 a barrel over WTI and Southern Green Canyon gained $1.30 to a $19.65 premium.

The premium for Thunder Horse, a sour crude with lower sulfur content than Mars, Poseidon and Southern Green Canyon, widened $2 to $22 above WTI.

To contact the reporter on this story: Aaron Clark in New York at aclark27@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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