The Canadian heavy oil discount narrowed on Thursday against the West Texas Intermediate benchmark, but the crude continued to trade at a wider discount than normal.
Expanding oil production in Alberta, coupled with tight pipeline and rail capacity to move it, has increased the discount since late last year.
The discount looks to diminish due to new deals being finalized between oil companies and railways and the start of operations at Alberta’s Sturgeon Refinery, Scotiabank analyst Michael Loewen said in a note on Wednesday.
Western Canada Select (WCS) heavy blend crude for April delivery in Hardisty, Alberta, settled at $24.75 a barrel below the West Texas Intermediate (WTI) benchmark crude price ,according to Shorcan Energy brokers, compared with Wednesday’s settle of $25.
The Alberta government on Wednesday estimated that the differential was costing the province’s heavy oil producers C$30 million to C$40 million in revenue per day.
Light synthetic crude from the oil sands for April delivery last traded at $1.75 over WTI, unchanged from Wednesday’s settle.