July 31, 2012 / 8:14 PM / in 7 years

Canada Crude-Extended Enbridge pipeline outage hits spreads

* September WCS quoted at $24 under WTI
    * Synthetic quoted at $4 under
    * Supply glut, shut-ins feared

    CALGARY, Alberta, July 31 (Reuters) - Canadian crude prices
fell on Tuesday after U.S. regulators prohibited Enbridge Inc
 from quickly restarting a key U.S. Midwest pipeline
following an oil spill late last week, opening the possibility
of a severe glut of supplies in Alberta, market source said.
    Western Canada Select heavy blend for September delivery
last sold for $24 a barrel under benchmark West Texas
Intermediate, compared with $22 a barrel under WTI on Monday,
according to Shorcan Energy Brokers.
    September light synthetic was quoted at $4 a barrel under
WTI, compared with $2.50 a barrel under a day earlier.
    The U.S. government said on Tuesday it will not allow
Enbridge to restart the 318,000-barrel-a-day Line 14 until the
company files a restart plan with the federal pipeline
regulator, tests the pipe and evaluates previous inspections.
 
    The company had said it expected to finish repairs to the
line, which extends to the Chicago area from Superior,
Wisconsin, on Tuesday. The line ruptured on Friday, spilling
more than 1,000 barrels of oil in rural Wisconsin.
    Canadian oil trade sources speculated that the conduit --
one of a number of Enbridge lines that carry Canadian crude to
U.S. markets -- could be off line for at least another two weeks
as a result of the order by the Pipeline and Hazardous Materials
Safety Administration.
    With supplies in Alberta already understood to be
backlogged, it raises the possibility that some production could
get shut in as tanks fill up, a marketer said.
    "It's always a possibility when the mainline goes down,"
said the marketer.
    Last week, Enbridge said it did not need to apportion its
pipeline system for August -- a rare situation with a system for
which producers are clamoring to move growing volumes out of
Alberta and the North Dakota Bakken regions.
    Enbridge said it was not yet known whether it might have to
ration space on the network after all.
    The September price spreads represent a contrast with deals
for August, when WCS sold for as much as $12.55 under WTI and
synthetic fetched a premium.
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