Canadian exports of crude by rail fall to four-year low

Reduced demand for oil and sufficient space on generally congested pipelines caused Canada's crude rail exports to plummet to their lowest level in four years in May, according to data from the Canadian Regulator. energy shown.

In May, Canadian exports by rail fell 63% from April, to just 58,048 barrels per day (b / d). Railroad crude exports also fell in April from the previous month, to 156,242 bpd from 350,567 bpd in March, and from an all-time high of 411,991 bpd in February 2020.

Canadian exports of crude by rail in May were at their lowest level since the summer of 2016, when forest fires near numerous oil sands operations shut down much of Canada's heavy oil production. .

This year, the collapse in demand for oil in Canada's primary export market, the United States, resulted in shutdowns of about 1 million b / d of Canadian production, resulting in pipelines failing have not been as overburdened with moving crude out of Canada as they usually are. With railroad crude being the most expensive option to ship oil to market, some producers halted railroad crude shipments when they cut production in April and May due to low oil prices.

Enbridge, the operator of the Mainline – North America & # 39; s largest pipeline system –told me this throughput through the Mainline system decreased by approximately 400,000 b / d in April, compared to an average first quarter throughput of 2.84 million b / d.

"We expect similar usage rates to likely continue through the end of the second quarter," Enbridge said in early May.

Despite the fact that some Canadian oil producers have started to restore some of the production they cut earlier this year, the pipelines carrying heavy oil to market are not overflowing like a few months ago, according to the report. estimates from analysts and pipeline operators. .

Due to falling prices and demand in the second quarter, Canada's oil production fell to 4.4 million b / d in May – the lowest production since mid-2016, when wildfires have crippled oil sands production, the U.S. Energy Information Administration (EIA) said last week.

By Tsvetana Paraskova for OilUSD

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