Canadian heavy crude’s differential to benchmark West Texas Intermediate (WTI) crude narrowed sharply on Tuesday, the first day of the new monthly trade cycle.
Western Canada Select heavy blend crude for February delivery in Hardisty, Alberta, last traded at $12.15 per barrel below the WTI benchmark, according to NE2 Canada Inc, having settled at $13.60 per barrel below the U.S. crude benchmark the previous day.
That was the narrowest WCS differential since early October.
The stronger differential is being driven by bitterly cold weather in northern Alberta’s oil sands region, which many traders expect will result in production outages, one industry source said. There has been strong buying from refiners, the source added.
Global benchmark Brent crude jumped to $80 a barrel, its highest since November, and WTI also rose as OPEC+ agreed to stick with its planned increase for February based on indications that the Omicron variant would have only a mild impact on demand.