Canadian Heavy Oil Strengthens as Crude-by-Rail Picks Up
Canadian Heavy Crude Surges as Crude-by-Rail Shipments Pick Up
(Bloomberg) -- Heavy Canadian crude’s discount to U.S. benchmark futures narrowed to the smallest since April as crude-by-rail shipments were forecast to increase.
Western Canadian Select, an oil sands benchmark, strengthened to a $9.10 discount on Wednesday, data compiled by Bloomberg show. The gap has narrowed $4.15 this month, with $1.30 shed on Tuesday. Prices are closing in on West Texas Intermediate futures after Canadian Pacific Railway Ltd. said crude-by-rail volumes were expected to rise 20% in the third quarter from about 160,000 barrels a day in the second quarter.
With pipelines full, crude shipped by rail has become the only real alternative left for producers to send excess oil out of the province. The region’s largest producers have been under mandatory production limits since January after rising production drove WCS prices as low as $50-a-barrel below WTI.
The heads of Canadian oil companies including Cenovus Energy Inc. and Suncor Energy Inc. are offering to boost crude-by-rail shipments in exchange for higher production limits.
To contact the reporters on this story: Robert Tuttle in Calgary at rtuttle@bloomberg.net;Kevin Orland in Calgary at korland@bloomberg.net
To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Jessica Summers, Carlos Caminada
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