Adds latest pricing for US, Canadian sour crudes.
North American sour crude prices rose relative to their benchmarks today after the 622,000 b/d Keystone pipeline carrying Canadian crude was shut down following a spill in North Dakota.
Canadian crude prices on either side of the spill diverged in Tuesday's trading, with Western Canadian Select (WCS) at Hardisty, Alberta, trading between a $9.15-11/bl discount to the CMA Nymex, with the midpoint representing a widening of about $1/bl day-over-day.
WCS at the Texas Gulf coast was up by about 45¢/bl from its prior assessment, trading at a $2.60/bl discount to CMA Nymex. Fellow Canadian heavy sour Cold Lake meanwhile was up by a similar level, trading between $2.25-$2.65/bl discounts against CMA Nymex.
The Keystone system is a major route for Canadian heavy crude destined for both the US midcontinent and the Gulf coast. Pipeline operator South Bow initiated a shutdown at 8:42am ET Tuesday after the leak occurred about 6 miles south of Kathryn, North Dakota, according to North Dakota environmental quality program manager Bill Suess.
A pipeline employee working on a pump station along the route heard what he described as a "mechanical bang" prompting him to shut down the pipeline, which took about two minutes, Suess said.
Crude was then seen surfacing in an agricultural field about 300 yards south of the pump station, where it was contained. Suess said there is no impact to a nearby stream. South Bow estimates about 3,500 bl was released.
No restart timeline
The company and government officials did not have an estimate for when the pipeline would restart.
Next steps involve assessing the area for other utilities before excavating down to the 30-inch pipeline to make repairs. The US Pipeline and Hazardous Materials Safety Administration (PHMSA) said it has dispatched personnel to the scene to conduct a failure investigation.
Today's upset is the latest of several incidents to disrupt the market since it was commissioned in 2010.
The pipeline halted flows for more than three weeks in December 2022 after it spilled about 12,937 bl of oil in Washington County, Kansas. A crack in a flawed weld was determined to be the cause.
Once fixed, PHMSA allowed the line to operate again, but at a reduced pressure. Only last month did PMHSA give South Bow the green light to increase pressure again.
Other US prices affected
Louisiana-delivered Mars and Thunder Horse widened their premiums over the Domestic Sweet (DSW) benchmark by over 30¢/bl, trading at 80¢-$1/bl premiums and $1.80-$1.90/bl premiums to the basis, respectively. Texas-delivered Southern Green Canyon (SGC) traded as strong as a 60¢/bl discount against the Cushing basis Tuesday morning, after trading at $1/bl discount for the prior two sessions.
April DSW was exchanged for May in the Cushing physical spot market at premiums as high 60-70¢/bl, from roughly 45¢/bl on the final day of the April trade month on 25 March. In the futures market, May Nymex WTI has moved up to end the session at a 48¢/bl premium to June, rising from a 26¢/bl premium at settlement in the prior session.
DSW is the assumed grade for delivery into the Nymex contract. It is blended to specifications in Cushing and is comprised of various crudes, including Canadian grades.
The appreciating differentials came despite pressure from weak export demand from the US Gulf coast.
