Inside Logistics

Crude by rail shipments drop to eight-year low in June

Fuel demand remained low due to measures taken to control the COVID-19 pandemic


August 24, 2020
by The Canadian Press (CPSTF)

CALGARY – Canadian exports of crude oil by rail fell to an eight-year low in June as North American fuel demand remained low due to measures taken to control the COVID-19 pandemic.

The Canada Energy Regulator says rail shipments of oil in June fell to about 42,820 barrels per day, down from 58,000 bpd in May and 156,000 bpd in April.

Shipments were 10 times as high in February, when they reached a record high of 412,000 bpd.

Rail transportation of crude oil is considered to be more expensive than shipping by pipeline so shippers tend to use it only when pipelines are full or if the destination market offers much higher prices than can be achieved in Canada.

Western Canadian producers shut down as much as one million barrels per day of oil production at times earlier this year to avoid selling at low prices, thus freeing up space on export pipelines.

In a report Friday, RBC energy analyst Michael Harvey says most of the barrels removed from the market have been restored or are being brought back on line as prices rise, although select production could remain offline permanently.