Canadian heavy crude’s discount narrowed versus the U.S. benchmark West Texas Intermediate (WTI) crude on Friday, nearing a fresh five-month low due to plunging global prices and dwindling Alberta inventories.
Traders took in stride a fire at Canada’s Syncrude oil sands facility, which led to the company declaring force majeure. The site upgrades heavy oil into light oil.
Western Canada Select (WCS) heavy blend crude for April delivery in Hardisty, Alberta, was trading at $13.10 per barrel below WTI, according to NE2 Canada Inc, narrower than Thursday’s settle of $14 under.
On Tuesday, the WCS-WTI differential was as narrow as $13, the smallest since Oct. 2.
Global oil prices tanked over 8% and hit their lowest since mid-2017 after Russia balked at OPEC’s proposed steep production cuts to stabilize prices as the coronavirus outbreak slows the global economy.
Strong demand from Gulf refiners for heavy oils are keeping the WCS-WTI differential tight, an energy source said.
Western Canadian oil inventories totalled 31.7 million barrels on Feb. 28, down from 32.5 million on Feb. 7, data provider Genscape said on Thursday.
Light synthetic crude from the oil sands was trading at $2.90 over WTI, a smaller premium than Thursday’s settle of $3.10.
Canadian light prices would normally rise more on the Syncrude news, but are held back by a declining global market, a Calgary industry source said.