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Heavy discount narrows slightly, rail limits eyed


Canadian heavy crude’s discount versus U.S. benchmark West Texas Intermediate (WTI) crude narrowed slightly on Friday, and industry observers said they awaited the impact of new rail limits.

Western Canada Select (WCS) heavy blend crude for March delivery in Hardisty, Alberta, was trading at $18 per barrel below WTI, according to NE2 Canada Inc, slightly narrower than Thursday’s settle of $18.05 under.

Canada said on Thursday it would impose temporary speed limits on trains hauling dangerous goods after a Canadian Pacific Railway Ltd crude oil train derailed and caught fire.

The speed limits could reduce current Canadian crude by rail capacity by 10%, Morgan Stanley analyst Benny Wong said.

Ottawa’s action is likely to increase domestic oil inventories, but not cause a “material blow-out” of differentials, Eight Capital analyst Phil Skolnick said.

Light synthetic crude from the oil sands traded at $4.40 below WTI, unchanged from Thursday’s settle.

Global oil prices fell 1% as Russia said it needed more time before committing to output cuts sought by other large producers while the coronavirus outbreak fanned worries about global crude demand.

The Canadian government-owned Trans Mountain oil pipeline is expected to cost C$12.6 billion ($9.47 billion) to expand, a sharp increase from the previous estimate of C$7.4 billion, the pipeline company’s chief executive said.

Canada’s biggest pipeline company, Enbridge Inc , fired back at the country’s largest oil producer, saying Canadian Natural Resources’ suggestions for determining future terms on the Mainline would cause at least a one-year delay.



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