Canadian heavy crude’s discount to West Texas Intermediate (WTI) widened on Tuesday, extending this month’s trend of weakening differentials.
Western Canada Select heavy blend crude for November delivery in Hardisty, Alberta, settled at $14.30 per barrel below the U.S. West Texas Intermediate (WTI) benchmark, according to NE2 Canada Inc, widening 85 cents from the previous day’s settle.
The discount on Canadian heavy crude has deepened steadily since the start of the month, after hitting its narrowest level in five months in late September in anticipation of Enbridge Inc bringing its Line 3 replacement project into service.
Linefill on the Line 3 pipeline started on Oct. 1. One industry source said it appeared traders had overbought WCS in advance of the extra capacity opening up on Line 3, and demand for barrels was now waning.
Even so strong benchmark U.S. crude prices, which Canadian barrels trade are discounted against, are making the outright price of WCS relatively expensive. Analysts at ARC Energy Research Institute said in a note WCS prices are at their highest since 2014.
Light synthetic crude from the oil sands for November delivery settled at $1.40 a barrel below U.S. benchmark crude, narrowing from the previous day’s settle of $1.55 a barrel below benchmark prices.
Global oil prices steadied after a volatile session, pausing a rally that has brought prices to multi-year highs and raised concerns that higher energy costs could derail the global economic recovery.