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TC Energy shut down the Keystone pipeline for several hours for unplanned maintenance as temperatures in the area of the Hardisty terminal were expected to drop to minus 35 Celsius.
Reuters reported that the emergency maintenance began on the evening of Tuesday and lasted until last evening. The Keystone pipeline carries close to 600,000 barrels of Canadian crude daily.
Meanwhile, Bloomberg has reported that frigid weather was disrupting the flow of oil in western Canada and northern U.S. states. Temperatures from Alberta to North Dakota are in deep sub-zero territory, and besides the Keystone pipeline, oil wells are also beginning to get affected.
This is coming at a bad time for U.S. crude oil supply, Bloomberg notes, with inventories recording drawdowns every week for more than two months now, inching closer to the three-year low reported in September.
This will likely have an effect on fuel prices as it will combine with slower supply growth in the United States as well. Drillers have been wary of returning to their pump-at-will strategy from before the pandemic, prioritizing shareholder returns instead.
The price for crude produced in the “colder” states is already reflecting the expectations for tighter supply going forward. According to Bloomberg, the discount of benchmark Canadian crude to WTI has narrowed by $3 from late December to $12.10 per barrel this week.
Meanwhile, the price for Bakken crude sold in Minnesota has gained $0.90 over the past two days, trading at a premium to WTI futures of $1.25 per barrel.
Benchmark prices are also on the rise, despite a decision by OPEC+ to continue adding production in February as concern about spare capacity and the actual ability of OPEC+ members to pump more is called into question. Meanwhile, in the United States, demand for fuels seems to be in decline, with the EIA reporting a gasoline inventory jump of 10 million barrels for the last week of December.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.