The volume of North American crude oil shipped by train continues to fall due to the narrowing spread between West Texas Intermediate (WTI), Bakken and North Sea Brent.
The Association of American Railroads (AAR) reported U.S. petroleum and petroleum product shipments were down 4.7% for the year through the end of August, compared to the first eight months of 2014. For the week ended Aug. 29, shipments were down 15.3%, year over year. However, Canadian crude by rail shipments rose for both periods compared to 2014, according to AAR. This was because of demand created for bargain-priced Canadian oil.
“We note from weekly crude oil import data that heavy crude from Canada has seen decent demand in the U.S. in recent weeks,” Global Hunter Securities said in an Aug. 28 analysis of crude-related rail traffic. “Much of the lift has been catalyzed by exceptionally low prices for Canada crude. Indeed, some quotes were putting Western Canadian Select (WCS) at about $20 per barrel (bbl) just two weeks ago.”