Experts say much of the heavy crude oil shipped south from Canada is held up at Cushing, Okla., a major U.S. oil hub. Because of a limited supply of pipeline capacity extending from Cushing to the Gulf Coast, Cushing has become the site of a bottleneck creating a local buildup of oil supply.
"Canada faces this glut of heavy crude in Cushing," said Morningstar's McColl. "It's been that bottleneck that's been pushing down on Canadian prices."
McColl said the section of Keystone XL extending from Cushing to the Gulf Coast, expected to be opened by the end of this year, would help to reduce the glut and increase Canadian crude prices.
"The price of Western Canadian would move up," said McColl. "It's very enticing for Canadian markets."
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Keystone XL is also an enticing prospect for American refiners, said Valero spokesman Bill Day, because even at an increase over its current market price, Canadian crude supplied via pipeline would still be significantly cheaper than WTI and Brent crude.
"The heavy Canadian oil right now is some of the lowest-priced oil on the planet," said Day. "Right now, Canadian crude oil is about $30 cheaper than WTI or Brent."
"The U.S. refiners are the greatest supporters of Keystone XL," said Andy Black, president of the Association of Oil Pipe Lines. "Refiners on the Gulf Coast will have additional options for crude, and additional access to crude that is lower priced."