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Alberta crude inventories hit record high

24 Jan 2018 20:48 GMT
Alberta crude inventories hit record high

Houston, 24 January (Argus) — Alberta crude inventory levels hit a new high in November, exiting the month a 64mn bl following constraints on export pipelines out of Canada.

This supplants the previous high of 62mn bl set in February 2017 before production issues at a major oil sands producer in March gave temporary relief to swelling storage facilities.

November's inventory level also represents a gain of 13pc, or 7.6mn bl, from October and is the largest monthly gain on record, according to data from the Alberta Energy Regulator (AER). November's level is about 4mn bl higher than the level in November 2016.

TransCanada's 590,000 b/d Keystone pipeline went down on 16 November following a leak, leaving large volumes of crude stranded. The line resumed operations by the end of the month but only at 80pc of flow rates, as dictated by the Pipeline and Hazardous Materials Safety Administration (PHMSA). TransCanada told Argus yesterday there was no indication of when the restriction would be lifted.

TransCanada's Keystone woes, coupled with apportionment on other pipelines, means crude continues to accrue at Albertan hubs. Only 54pc of crude nominated for Enbridge's 800,000 b/d Line 67 and 796,000 b/d Line 4 will be allowed to flow in February.

Prices started to edge down slowly starting in late Octoberas increasing production and pipeline congestion was expected to slowly creep back into the Canadian crude landscape. But the restrictions appeared suddenly with the Keystone shutdown in mid-Novemberand had severe implications on oil prices at trading hubs.

Western Canadian Select (WCS) at Hardisty was seen at a new four-year low yesterday, trading at a $27.50/bl discount to the March CMA. In early November, a prompt-month barrel of WCS exchanged hands for about $14/bl under the CMA, or at an outright price around $42/bl.

Notable support downstream for the Canadian heavy sour grade has been seen. The WCS differential at Houston, Texas, hit a record high of $3.30/bl below the February CMA on 19 January, for an outright price of $59.96/bl.