Canadian heavy crude’s discount narrowed versus the U.S. benchmark West Texas Intermediate (WTI) on Wednesday, as production curtailments kept a supply glut from exceeding storage capacity.
The discount, or differential, to WTI is trading near its lowest levels in 11 years because of deep Canadian output cuts and slowly improving demand as economic lockdowns related to the pandemic ease, a Calgary-based trader said.
Western Canada Select (WCS) heavy blend crude for June delivery in Hardisty, Alberta, traded at $4.05 per barrel below WTI, according to NE2 Canada Inc, narrower than Tuesday’s settle of $4.25 under.
“There is hope now, but we certainly are not where producers would be looking at bringing production back,” the trader said.
Light synthetic oil traded at 50 cents under WTI, wider than its Tuesday settlement of 35 cents under.
Global oil prices fell more than 3% despite the first decline in U.S. crude inventories since January, as markets were affected by a solemn address from the U.S. Federal Reserve chairman warning that economic recovery from the pandemic would take many months.