The Globe and Mail reports in its Thursday edition that heavy crude prices turned sharply lower this week as restrictions on key export pipelines force surging production into storage. The Globe's Jeff Lewis writes that Western Canadian Select (WCS), a blend of conventional heavy crude and bitumen from the oil sands, has been under pressure from reduced flows to the United States on TransCanada's Keystone pipeline and space rationing on Enbridge's mainline system.
The restrictions come just as Suncor's $17-billion Fort Hills mine and other expansions gear up, pushing the discount on Canadian heavy crude to more than double levels seen earlier this year.
On Wednesday, WCS barrels for delivery in January changed hands for $29.75, a discount of $26.85 against West Texas Intermediate (all figures U.S.). Some lightly traded December volumes fetched $33 below WTI. Crude had already backed up in Alberta after a 5,000-barrel spill in South Dakota shut the Keystone pipeline for two weeks last month.
The 590,000-barrel-a-day pipeline has restarted at reduced rates, but the company has not said when it would return to normal service. Enbridge is rationing space on its Alberta-to-Wisconsin Line 67 pipeline.
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