Canadian heavy crude’s discount narrowed versus the U.S. benchmark West Texas Intermediate (WTI) oil on Monday, as a global deal on output cuts failed to substantially lift oil prices in the face of a worldwide plunge in demand due to the coronavirus pandemic.
Western Canada Select (WCS) heavy blend crude for May delivery in Hardisty, Alberta, traded at $17.20 per barrel below WTI, according to NE2 Canada Inc, narrower than Thursday’s settle of $19.25 under.
The Organization of the Petroleum Exporting Countries, along with Russia and other countries – known as OPEC+ – agreed at the weekend to cut output by 9.7 million barrels per day in May and June, representing about 10% of global supply.
Brent crude rose 26 cents, or 0.8%, to settle at $31.74 a barrel on Monday, while WTI crude ended down 35 cents, or 1.5%, at $22.41 per barrel.
“Given very weak pricing, we are expecting most operators to revert to some form of dynamic storage for (steam-driven) projects in order to defer bitumen sales while simultaneously maintaining reservoir integrity,” analysts at TD Securities said.
Data as of last week showed refinery runs across Canada fell to roughly 1,360 mbpd, or a 70% utilization rate, from 1,550 mbpd, or 82% utilization, a week prior, analysts at Tudor, Pickering, Holt & Co said.
A Canadian government source told Reuters it had not formally agreed to a curtailment policy since that was the responsibility of the country’s energy-producing provinces.