Weakness in Canadian heavy oil prices also reflects the impact of IMO regulations, which require ships to emit less sulphur, said John Coleman, principal research analyst at consultancy Wood Mackenzie.
Western Canada Select (WCS) heavy blend crude for February delivery in Hardisty, Alberta, was trading at $23.90 per barrel below WTI, according to NE2 Canada Inc, wider than Tuesday’s settle of $23.75.
The spread touched $24 on Friday, the biggest discount since December 2018.
Canadian heavy crude discounts have widened due to Alberta inventories of 38 million barrels as of December, and storage levels are likely to rise further in coming weeks, Citi Research said in a note. Storage levels may abate in the second quarter as rail volumes ramp up and pipeline capacity expands modestly, Citi said.
Light synthetic crude from the oil sands traded at $4.50 below WTI, compared with Tuesday’s settle of $5 under.
Global oil prices were slightly down in seesaw trade, pressured early by data showing big increases in U.S. refined products but lifted later by the signing of a Phase 1 trade deal between Washington and Beijing.
TC Energy Corp plans to start pre-construction work in February for its Keystone XL oil pipeline, the start of what it expects to be a busy work schedule for the long-delayed project.