https://oilprice.com/Energy/Oil-Prices/Canadian-Oil-Prices-Reach-12-Month-High.html
[As reported here previously, the oil-industry-manufactured 'Canadian
energy crisis' (in reality, the Alberta bitumen demand-driven temporary
price slump) is over. The hyperbole from oil-funded politicians and
media will continue as previously scheduled.]
Canadian Oil Prices Reach 12-Month High
By Irina Slav - Jan 08, 2019, 9:30 AM CST
Canadian crude oil hit the highest price level in more than a year on
growth in oil-by-rail shipments, Bloomberg reports based on data about
price movements for the commodity it had compiled.
As a result of the increase in oil-by-rail shipments, Canada’s benchmark
Western Canadian Select yesterday traded at a discount of only US$10.50
to West Texas Intermediate. This compares to more than US$50 a barrel in
mid-2018.
It’s worth noting the shrinking discount of WCS to WTI does not fit in
with the growing amount of Canadian heavy being moved to refineries in
the United States by rail. As Bloomberg’s Robert Tuttle explains, the
current discount is too narrow to cover the costs of oil-by-rail
shipments to U.S. refiners. In fact, it’s too narrow to cover the costs
of shipping some of the oil by pipeline, too.
Yet rail shipments are set to continue growing as pipelines are working
at capacity and no new ones are coming. But some familiar with the
industry argue that moving Canadian heavy crude by rail is not as
expensive as it may seem: unlike the crude that flows via pipelines,
bitumen doesn’t have to be diluted—which also costs money—to be loaded
on train cars. This line of argument could explain the rise in
oil-by-rail shipments as could the fact there are simply no other
options for Canadian producers.
According to data from Genscape cited by Bloomberg, Canadian oil
producers exported some 281,000 barrels of crude daily by rail in the
last week of December, which compared to an average of 263,000 bpd for
November. Producers, Genscape analyst Mike Walls told Bloomberg, also
closed several long-term oil-by-rail delivery contracts late last year,
which means these shipments will continue strong even after production
cuts enforced by the Alberta government at the end of last year begin to
make a dent in supply.
