The Canadian heavy oil discount widened slightly on Tuesday against the West Texas Intermediate (WTI)benchmark as growing crude stockpiles continued to exceed capacity to move product out of the oil-rich province ofAlberta.
Western Canada Select (WCS) heavy blend crude for April delivery in Hardisty, Alberta, settled at $25.50 a barrel below the WTI benchmark crude price, according to Shorcan Energy brokers, compared with Monday’s settle of $25.25.
Concerns over growing surplus in the Canadian crude market, with storage levels rising versus last year, are keeping the discount deep in the near term, said Tim Pickering, chief investment officer at Auspice Capital Advisors.
The glut of stranded barrels in Western Canada is expected to remain until a deal is reached between shippers and rail companies to move more Canadian heavy crude to the U.S. Gulf.
An expected return of TransCanada Corp’s Keystone pipeline to full pressure, following a November leak, would help reduce the discount, traders have said.
Light synthetic crude from the oil sands for April delivery last traded at $2.15 over WTI, a smaller premium than Monday’s settle of $3.