Canadian heavy crude’s discount narrowed versus the U.S. benchmark West Texas Intermediate (WTI) on Friday to the smallest level in 11 years of records.
With hundreds of thousands of Western Canadian barrels shut in due to low oil prices, some refineries are running short of heavy oil, a Calgary-based trader said.
Western Canada Select (WCS) heavy blend crude for June delivery in Hardisty, Alberta, traded at $5.70 per barrel below WTI, according to NE2 Canada Inc, narrower than Thursday’s settle of $6.50 under.
The intraday low of $5.40 is the lowest level recorded by NE2 in data that goes back to 2009.
Cuts to Alberta’s oil production have been large enough to avoid filling storage tanks to the brim as the coronavirus pandemic slashes demand from refiners, two of Canada’s largest crude producers said on Wednesday.
The narrowing differential is due to reduced supplies, TD Securities analyst Menno Hulshof said in a note on Thursday.
Data as of the week ended April 21 showed Canadian overall refining runs increasing week over week, but remaining outside the 3-year average, Tudor Pickering Holt & Co said in a note.
Global oil prices rose as OPEC and its allies embarked on record output cuts to tackle a supply glut due to the coronavirus crisis.
Imperial Oil moved ahead and extended maintenance periods at its Kearl and Syncrude production sites.
The most-active trading occurs during the first half of each month, leading up to the nomination period for shipments on Enbridge Inc’s Mainline pipeline.