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Crude-by-rail shipments from Western Canada staged a minor recovery in March after falling in February to their lowest level in nine months, but oil storage levels remain stubbornly high, according to Genscape Inc.

The U.S. company, which monitors Western Canadian rail terminals handling about 80 per cent of typical volumes, reported Wednesday that average rail loadings in March were 150,000 barrels a day.

That’s up from an average of 144,000 b/d in February, but down markedly from the 281,000 b/d it recorded in January as Alberta government production cutbacks kicked in.

“Rail loadings were up in March but only up by 6,000 [b/d], which is not enough to actually start to draw down inventories again,” Genscape senior oil analyst Mike Walls said. “It’s just slowed down the impact of any curtailments.”

The recovery came as Imperial Oil Ltd. restarted rail shipments from its Edmonton-area terminal after largely shutting them down in February.

Genscape estimates the amount of oil in storage as of March 29 was 35 million barrels, about the same as in early December when the Alberta government announced it would order the industry to produce less to free up export pipeline space and reduce stored barrels.

The March number is about two million barrels lower than recent peak levels just before the cutbacks began in January, Mr. Walls said, and higher than the 33.4 million barrels stored at the end of March, 2018.

Imperial said it stopped rail shipments because the curtailment program resulted in narrower differences between prices for crude sold in Alberta compared with those in the United States.

Price differentials below US$15 a barrel make it less profitable to pay rail fees – which are generally higher than pipeline tolls – to win better prices on the U.S. Gulf Coast, Mr. Walls said.

The difference in price between Western Canadian Select bitumen-blend oil and New York benchmark West Texas Intermediate widened to as much as US$52 a barrel in October, but shrunk to single digits in December and January.

The differential was US$8.15 on Monday, down from an average of US$10.64 in March, according to oil brokerage Net Energy Exchange.

Production from the oil sands in northern Alberta should start to fall soon as companies begin spring maintenance shutdowns on their projects, Mr. Walls said, which will likely result in lower storage levels.

Alberta’s NDP government is moving ahead with a plan to add rail assets capable of moving 120,000 b/d of crude starting by the end of the year, but the Opposition United Conservative Party says it will cancel that plan if it wins the election on April 16.

The Alberta energy department declined comment due to the ongoing provincial general election campaign.

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