Canadian crude price strengthens as Enbridge fills new pipeline

ROBERT TUTTLE

CALGARY, Alberta (Bloomberg) -- Heavy Western Canadian Select crude’s discount to West Texas Intermediate shrank to the least since 2012 as a new pipeline started and production sites were shut for maintenance.

The discount to the U.S. benchmark narrowed 25 cents to $8.50/bbl Monday, the smallest margin since September 2012, according to data compiled by Bloomberg. The grade’s absolute price rose 3 cents to $50.43, the highest since Dec. 4. WTI futures fell 22 cents to $58.93 in New York.

WCS strengthened as Enbridge Inc. said it filled a new 570,000 bpd pipeline last month and MEG Energy Corp. was said to plan maintenance at its 210,000 bpd Christina Lake oil sands site.

Filling the Enbridge line “could provide some tightness for WCS,” Michael Loewen, commodity strategist at TD Securities, said in an instant message. You “got to fill the pipeline. That takes up volumes.”

The Enbridge line will raise the amount of crude that can be shipped from Edmonton, in northern Alberta, to the storage terminals in Hardisty, in southern Alberta. On the supply side, MEG’s work at Christina Lake is scheduled for this quarter, according to a person familiar with the plans. Crude from the site is marketed as Access Western Blend, which competes with WCS. Suncor Energy Inc. said in February it planned four weeks of work at its Firebag operation this quarter, cutting bitumen output by 40,000 bpd.

Demand from refineries in the U.S. Midwest also pushed up WCS. Plants there ran at their highest seasonal rate since 2012 the week ended April 27, according to U.S. Energy Department data. Plans are increasing production before the peak summer driving season with Americans forecast by AAA to use more gasoline than any time since 2007.