The discount on Canadian heavy crude widened versus U.S. benchmark West Texas Intermediate (WTI) crude on Wednesday, with traders pointing to large stockpiles and limited pipeline space.
Alberta oil storage levels have hit record highs after a temporary Keystone pipeline outage last year and a rail strike.
In October, Alberta, Canada’s main oil-producing province, eased curtailments on oil production, allowing companies to produce additional oil, provided they move it by rail.
Western Canada Select (WCS) heavy blend crude for February delivery in Hardisty, Alberta, settled at $22.75 per barrel below WTI, according to NE2 Canada Inc, wider than Tuesday’s settle of $22.55.
The heavy differential last week touched $23.40 below WTI, the biggest discount since early December 2018.
Light synthetic crude from the oil sands settled at $3.25 below WTI, wider than Tuesday’s settle of $2.85 below.
Inventory data confirmed third party reports of again challenging levels, rising 5.3 million barrels in November versus a 3-year average build of 2.7 million barrels, to 74.1 million barrels, Tudor Pickering Holt & Co analysts said in a note Wednesday.
Global oil prices fell more than 4% on Wednesday in a wild swing, soaring close to a four-month high in early trade on an Iranian rocket attack on U.S. forces in Iraq before retreating as the countries quickly ratcheted back tensions.