The Canadian heavy oil differential widened against the West Texas Intermediate (WTI) benchmark on Tuesday, hitting a record-wide spread, while the light oil differential nudged up again, reaching a six-year record for the fourth trading day in a row.
Western Canada Select (WCS) heavy blend crude for November delivery in Hardisty, Alberta, settled at $48 a barrel below WTI crude futures , compared with Friday’s settle of $45.50, according to Shorcan Energy brokers. Monday was a market holiday in Canada.
Light synthetic crude from the oil sands for November delivery settled at $24.25 under WTI, the widest discount since February 2012, versus Friday’s settle of a $21.70 discount.
The hefty discounts on Canadian crudes reflect transportation bottlenecks out of Western Canada, along with softer demand as a number of U.S. refiners are offline for maintenance, said Michael Tran, Commodity Strategist with RBC Capital Markets.
The spread between WTI and WCS is further compounded by a global oil price rally, with Canadian producers being left behind due to the constraints, said Tran.
Global oil prices rose about 1 percent on Tuesday on growing evidence of falling Iranian crude exports before the imposition of new U.S. sanctions, as well as a partial production shutdown in the Gulf of Mexico because of Hurricane Michael.