(Chicago Tribune - June 14, 2013) Surge in U.S. oil-by-rail suffers first slowdown as spreads slim (by Jonathan Leff and Nia Williams, Reuters)
http://www.chicagotribune.com/business/sns-rt-us-usa-oil-railbre95d0bu-20130614,0,5678635.story
NEW YORK/CALGARY (Reuters) - Oil traders are gently tapping the brakes on the thriving business of shipping U.S. and Canadian crude oil by rail, industry data showed this week, the first sign of a slowdown after a two-year boom.
As price spreads for moving sweet North Dakota or Canadian crude to premium markets on the Gulf Coast slump to their lowest since early 2011, companies are shifting more oil back through pipelines rather than using costlier railcars, raising new questions about the longevity of oil-by-rail.
The number of railcars loaded with crude or refined fuel per week in the United States has dropped by about 5 percent since reaching a record 14,500 tank cars during May, according to Reuters calculations based on data from the Association of American Railroads released on Thursday.
Sandy Fielden, an analyst at consultants RBN Energy, said there are signs that lease rates for tank cars are also ebbing.
It all adds to growing evidence that the U.S. oil market is entering a new phase, leaving behind a time when price spreads and trading opportunities were defined by the lack of transportation infrastructure to get booming shale crude to market. After a wave of new investment, producers now have more options for reaching different markets, boosting prices.
"The past 18 months have brought booming business for the rail industry from crude-by-rail and every boom inevitably has a bust. It remains to be seen if we have reached that point yet," he wrote in a report published on Thursday.
