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Prices recovering for Western Canadian crude

Monday, 12 August 2019 | 20:00

Alberta’s oil production curbs finally appear to be draining inventories, at least for now. Crude supplies in Western Canada fell by 2.75 million barrels last month to the lowest since November 2017, Genscape said Aug. 7. The decline is welcome news for the province, which has been struggling to set production limits at a level that would shrink inventories by making oil cheap enough to stimulate exports by rail, but not so cheap that prices collapse, as happened last year.

Crude-by-rail exports have picked up, rising in June to the highest monthly average since January, according to Genscape. Oil sands producer Cenovus Energy said last month it was “on track” to ramp up crude-by-rail shipments to 100,000 barrels a day by year-end, while Canadian Pacific Railway expects crude-by-rail shipments to rise 20 percent this quarter versus the last. Pipeline companies are also finding ways to add some extra capacity to existing pipelines by adding chemical agents to boost the flow.

The price for heavy Western Canadian Select was about $14 per barrel less than the U.S. benchmark West Texas Intermediate on Aug. 8, a big improvement from the $40 price gap suffered by Canadian producers last fall when oversupply and limited takeaway capacity cut deeply into the value of Canadian crude.
Source: Bloomberg

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