Heavy crude discount widens after rally

The Canadian heavy oil discount widenedagainst the West Texas Intermediate (WTI) benchmark on Thursday,pulling back from a multiday rally on an unexpected boost inpipeline capacity as some producers temporarily cut production.

* Western Canada Select (WCS) heavy blend crude for Maydelivery in Hardisty, Alberta, settled at $17.10 a barrel belowthe WTI benchmark crude price , according to ShorcanEnergy brokers, compared with Tuesday's settle of $16.15.

* Some heavy oil producers have slowed production over thesteep discount.

* The discount is expected to persist for the foreseeablefuture, as rising output in Alberta's oil sands outstripspipeline and rail shipping capacity.

* An expected return of TransCanada Corp's Keystonepipeline to full pressure, following a November leak, would helpreduce the discount, traders have said.

* Light synthetic crude from the oil sands for May deliverylast traded at $1.75 over WTI, a slightly larger premium thanWednesday's settle of $1.70.

(Reporting by Julie Gordon in Vancouver, editing by G Crosse)