Canadian Producer Takes Production Off-Line -- Too Much Oil -- The Williston Basin, North Dakota, USA

Link here to an Investors.com story. 

This is an update to an Investors.com story yesterday and normally I would just update the original post, and not post a new stand-alone, but this is too interesting to get lost in the bowels of the blog.

Oil producers in the Bakken shale hit the wall this month as production outstripped pipeline capacity and prices toppled.

Bakken crude priced at Minnesota's Clearbrook terminal dropped 33% year to date to close near $71 a barrel Wednesday. Canadian heavy crude from tar sands staged a similar fall.

Both rebounded Tuesday, after Canadian Natural Resources halted its Horizon oil sands operation. The 110,000-barrel-a-day facility could be offline two to three weeks, offering mild relief to the region's supply glut.

The Bakken shale, centered mainly under North Dakota and Canada's tar sands, has helped curb a long-term decline in North American oil production. The Bakken has also fueled optimism that the deluge of natural gas production from shale plays, which has forced gas prices to decade lows, might translate to a similar surfeit in oil.

Several observations:

• analysts may extrapolate the price Canadian oil sands to remain "profitable enough" for their investors
• we now know why the Canadian government pushed for the Keystone XL so hard; this is devastating
• pipelines and crude-by-rail operations are able to get top dollar for their shipping (investors: take note)
• this could delay North Dakota's run-up in production to take the #2 production spot among the states
• peak oil? what peak oil?

By the way, CNBC was talking about the demand destruction of gasoline which I blogged about two days ago (though I can't take credit; the story was sent to me by Don).

I see oil is up almost a buck in pre-market futures. Go figure. Too much oil. Gasoline demand destruction. Strong US dollar in light of euro implosion. Mideast quiet (with regard to headlines; much simmering just below the surface).