Increase of crude exports by rail accompanied by wide price differential: Auspice
Posted December 21, 2018 10:16 am.
Last Updated December 21, 2018 1:06 pm.
This article is more than 5 years old.
CALGARY (660 NEWS) — The National Energy Board is reporting that crude-by-rail exports in Canada hit a record high of 327,299 barrels per day in October.
That’s up more than 21 per cent compared to September, and the first day it’s ever exceeded more than 300,000 bpd.
Tim Pickering, Chief Information Officers of Auspice Capital, says October is the same month we saw the price differential widen.
“In order to run rails cars you need the economics, and the economics are really precipitated by that wide differential, meaning it only makes sense to add rail cars if a wide differential exists. So there is no surprise that we have seen that growth into October.”
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Pickering added that rail isn’t ideal, but it is part of the solution right now.
“The wide differential tells you, we’ve got a problem in terms of moving the capacity we are producing. Again, it’s not a bad thing, but it highlights the problem,” said Pickering.
The price discount has narrowed to around $15US since the Alberta government announced a mandatory curtailment starting January 1, 2019.
Pickering believes with that, you will see the number of rail cars in use level off.
