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Alberta’s oil cuts could hit light oil producers, rail shipments – BOE Report

December 5, 2018

Alberta’s decision to mandate output cuts to reduce a supply glut will have negative effects on North American producers of lighter oil used for blending and U.S. refiners importing crude via rail, even as several major Canadian energy companies cheered the move.

Canada’s oil production is at a record 4.6 million barrels a day, but producers cannot get oil to market because the pipelines that cross into the United States are full. Pipeline construction, particularly in Canada, has not kept up with record output.

Shippers and refiners are moving discounted barrels of oil via rail or trucks, but the storage glut sits at more than 35 million barrels in Alberta, just below all-time records set in September, according to data firm Genscape.

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