Deep freeze disrupts crude flows in oil sands and Bakken shale
BNN Bloomberg
A deep-freeze in Canada and Northern U.S. is disrupting oil flows, causing a surge in crude prices just as American stockpiles are declining.
A deep-freeze in Canada and Northern U.S. is disrupting oil flows, causing a surge in crude prices just as American stockpiles are declining.
With temperatures from North Dakota to Northern Alberta below zero Fahrenheit (-18 Celcius), TC Energy Corp.’s Keystone pipeline was shut late Tuesday, with the cold slowing oil flows and making it hard to restore service. In North Dakota’s Bakken shale, production has started to succumb to the freeze, sending local crude prices to their highest since November. Canadian oil has also jumped.
The disruptions mean less supplies at a time when U.S. stockpiles have been shrinking every week since mid-November and getting closer to September’s three-year low. Drillers have been slow to restore output to pre-pandemic levels as they prioritize shareholder returns over growth. This further supports growing predictions that the oil market will return to a deficit this year, with some like Pioneer Natural Resources Co. Chief Executive Officer Scott Sheffield expecting oil to range from US$75 to US$100 a barrel.
Even though Western Canada and North Dakota are usually cold this time of year, temperatures have been lower than usual.
Western Canadian Select crude’s discount to the U.S. benchmark has shrank by almost US$3 dollars since Dec. 27, to US$12.10 per barrel on Wednesday.
