Canadian heavy crude’s discount versus the U.S. benchmark West Texas Intermediate (WTI) oil narrowed on Tuesday, as traders factored in OPEC+ supply cuts that look to ease a global glut, and space on Canadian pipelines.
Cuts totaling 9.7 million barrels per day take effect in May, although they fall well short of estimates for lost demand due to the COVID-19 pandemic.
A Calgary-based industry source said the market was “extremely confused” trying to account for curtailments, plunging demand and storage levels.
Available pipeline capacity in Western Canada has improved access to markets, however, for Canadian oil. Enbridge Inc’s pipeline network is running with unused space.
Western Canada Select (WCS) heavy blend crude for May delivery in Hardisty, Alberta, traded at $14.75 per barrel below WTI, according to NE2 Canada Inc, narrower than Monday’s settle of $16.85 under.
Global oil prices fell around 6% on investor fears about lost demand due to the pandemic.
Light synthetic crude for May delivery traded at $9.10 below WTI, narrower than Monday’s settle of $11 under.