Canadian heavy crude’s differential to benchmark West Texas Intermediate (WTI) crude widened slightly on Thursday after three straight days of gains.
Western Canada Select heavy blend crude for January delivery in Hardisty, Alberta, was last trading at $16.95 per barrel below the WTI benchmark, according to NE2 Canada Inc, having settled at $16.65 per barrel below the U.S. crude benchmark on Wednesday.
WCS has narrowed nearly $2 since the start of the week, after the Trans Mountain pipeline restarted operations on Sunday. Trans Mountain, which ships 300,000 barrels per day of crude from Alberta to Canada’s Pacific Coast was shut down for three weeks because of record-breaking floods in British Columbia.
The heavy crude differential is likely to continue strengthening towards a discount of $12 a barrel to U.S. crude, said Robert Fitzmartyn, an analyst with Stifel FirstEnergy.
Prices are also being supported by strong flows into the U.S. Midwest on the recently replaced Enbridge Inc Line 3 pipeline, and good demand for heavy oil on the U.S. Gulf Coast.
Global oil prices settled lower on fears about the economic outlook in China, the world’s biggest oil importer, following ratings downgrades to two Chinese property developers, and after some governments took measures to fight the Omicron variant of the coronavirus.