Canadian heavy crude’s discount versus U.S. benchmark West Texas Intermediate (WTI) crude narrowed on Tuesday to a nearly three-month low, as the impact of frigid weather last month hampered production.
Western Canada Select (WCS) heavy blend crude for March delivery in Hardisty, Alberta, was trading at $15.75 per barrel below WTI, according to NE2 Canada Inc, narrower than Monday’s settle of $16.75 under.
The differential’s lowest price, $15.65, represented the narrowest WCS-WTI differential since mid-November.
Cold weather in Alberta last month reduced output and helped drain inventories, and that factor is more than offsetting the impact of slowing rail movement, a trader said.
Canada said last week it would impose temporary speed limits on trains hauling dangerous goods after a Canadian Pacific Railway Ltd crude oil train derailed.
Protests related to the Coastal GasLink pipeline were disrupting rail shipments. Canadian National Railway Co said it would be forced to shut down significant parts of its Canadian rail network unless blockades are removed.
Alberta has agreed to divest its contracts to move additional crude by rail to market, Premier Jason Kenney said, but he declined to release details and said the agreements were still being finalized.
Upcoming turnarounds at oil sands sites were seen as supportive to prices.
Light synthetic crude from the oil sands was trading at $2.50 below WTI, narrower than Monday’s settle of $4.15 under.
Global oil prices rose from a 13-month low as the number of new coronavirus cases slowed in China, easing some concern over the potential for lengthy oil demand destruction.