Canadian heavy crude’s differential to benchmark West Texas Intermediate (WTI) crude widened on Friday, while remaining in sight of a recent three-month high.
Western Canada Select heavy blend crude for February delivery in Hardisty, Alberta, last traded at $12.65 per barrel below the WTI benchmark, according to NE2 Canada Inc, having settled at $12.40 per barrel below the U.S. crude benchmark on Thursday.
WCS narrowed to $12.10 per barrel below WTI at the start of the week, the tightest discount since October, as cold weather in Alberta slowed production and the level of crude in storage inventories dwindled to 31.8 million barrels per day.
The cold snap is due to ease over the weekend, weather forecasts showed.
Canadian heavy crude differentials are likely to remain strong in coming months due to ample pipeline takeaway capacity out of western Canada and strong U.S. refinery runs, which are close to the five-year average, said John Coleman, an analyst at energy consultancy Wood Mackenzie.
Global oil prices settled lower as the market weighed supply concerns from the unrest in Kazakhstan and outages in Libya against a U.S. jobs report that missed expectations and its potential impact on Federal Reserve policy.