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WCS Hardisty-Cushing crude spread widens to two-year high on Keystone shutdown

Houston — The ongoing shutdown of TransCanada's Keystone crude pipeline in South Dakota helped push the spread between the price differentials for Western Canadian Select in Hardisty, Alberta, and in Cushing, Oklahoma, to its widest level in more than two years Tuesday, sources said.

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While WCS at Hardisty was heard talked at the NYMEX light sweet crude futures contract calendar month average (WTI CMA) minus $16.85/b Tuesday, a decline of 85 cents/b from Monday's assessment, the same grade at Cushing was talked at WTI CMA minus $6.80/b, an increase of $4.25/b day on day.

Those price movements boosted the spread between the WCS grades to $10.05/b from $4.95/b on Monday, its widest level since reaching $10.50/b on August 12, 2015.

TransCanada shut the pipeline November 16 after it detected a leak of 5,000 barrels at a site 3 miles southeast of Amherst, North Dakota.



A company spokesman on Tuesday said while progress is being made at the site, it will be "some time" before a cause for the leak is determined and that the company does not yet have a timeframe for when operations will resume.

Sources said another factor moving prices for WCS Tuesday was pipeline operator Enbridge's apportionment Monday. Enbridge set the apportionment for December crude shipments on Line 4/67 on its Canadian Mainline System at 21%, which one source described as "large," and compares with 5% apportionment in November. The Line 67 pipeline typically carries heavy western Canadian barrels from Alberta.

The widening of the spread between differentials at Hardisty and at Cushing is probably about 60% due to the Keystone shutdown and 40% due to the apportionment, the source said.

TransCanada's aim is to recover the spilled crude, and there are 150 responders at the site, compared with 75 responders on Friday, in addition to dump trucks, excavators and bulldozers, a spokesman said Monday.

Over the weekend, TransCanada built a gravel road to the site in order to provide access for heavy equipment, a spokesman said.

--Pat Harrington, patrick.harrington@spglobal.com

--Ashok Dutta, ashok.dutta@spglobal.com

--Edited by Keiron Greenhalgh, keiron.greenhalgh@spglobal.com