Heavy Canadian crude isn’t getting any cheaper—but that hasn’t stopped companies from splurging on costly rail shipments.
Rail-car loadings hit a record 356,000 barrels a day in the week ended Jan. 11, up from a daily average of 296,000 barrels in December, according to Genscape Inc., which monitors some of the larger crude-by-rail terminals in Western Canada. The surge comes even heavy Western Canadian Select’s discount to the U.S. benchmark reaches a level that makes rail transport inefficient.
In the U.S., demand for heavy Canadian crude could rise as a crisis between the U.S. and Venezuela worsens. Western Canadian Select crude’s discount to futures narrowed $1.75 to $9.25 a barrel on Wednesday amid the possible imposition of U.S. sanctions on Venezuelan crude, which is similar to heavy Canadian oil and competes with it on the U.S. Gulf Coast.