Canadian heavy crude’s differential to West Texas Intermediate (WTI) deepened further on Thursday, trading at levels last seen in April 2020.
Western Canada Select heavy blend crude for December delivery in Hardisty, Alberta, last traded at $19.65 per barrel below the WTI benchmark, according to NE2 Canada Inc, widening from a settlement of $18.50 per barrel below the benchmark on Wednesday.
A combination of factors including strong Canadian oil sands production and weak demand for heavy barrels on the U.S. Gulf Coast weighed on WCS.
Canadian Natural Resources Ltd President Tim McKay told a quarterly earnings call on Thursday that the WCS discount always widens out in November and December as refiners make year-end inventory adjustments. McKay said he expected differentials to tighten up in 2022 and remain at a discount of less than 20% to U.S. crude.
Despite the deeper discount, the outright price of WCS remains relatively strong at around $60 a barrel, thanks to a rally in U.S. crude this year.
Global oil prices sank on Thursday in a volatile session after a report that Saudi Arabia’s oil output will soon surpass 10 million barrels per day for the first time since the start of the COVID-19 pandemic.